An investor group led by AEA Investors has agreed to sell off its specialty chemicals company Noveon to publicly traded Lubrizol in a transaction valued at $1.84 billion (€1.53 billion).
The deal comprises approximately $920 million in cash and assumption of Noveon’s net debt, which was $920 million at the end of 2003, according to a press statement.
The private equity group – which includes DLJ Merchant Banking, a division of CSFB Private Equity, and MidOcean Partners, formerly part of DB Capital Partners – acquired Noveon in February 2001 for about $1.4 billion when it bought out the performance materials division of global aerospace company BFGoodrich. BFGoodrich had sold off the segment in an effort to reduce its own debt.
The successful exit for AEA and its co-investors comes after a series of ups and downs in attempting to float Noveon. In July 2002, the chemical company filed to go public but withdrew its intention in May 2003, citing poor market conditions. In February, Noveon once again decided to push for an initial public offering to be completed in May.
According to a Noveon spokesperson, while waiting to go public, the company was approached by Lubrizol and offered a price that was more favourable to shareholders than going through with the IPO.
Lubrizol’s purchase comes at a time of strong performance for specialty chemical makers, and the company’s stock inched higher on the NYSE after the acquisition announcement.
AEA Investors – founded in 1969 by the Rockefeller, Harriman and Mellon industrial families – manages more than $1.5 billion in assets. The exclusive firm derives much of its financing from wealthy individuals, and holds stakes in a variety of companies, including Rand McNally.
DLJ Merchant Banking Partners is part of CSFB Private Equity, which manages more than $30 billion in assets. Last month, Credit Suisse First Boston unveiled plans to combine its private equity, hedge fund and other alternative asset businesses to create a new group that will trade as Alternative Capital Division (ACD) and target $50 billion in assets under management over the next five years.
MidOcean was spun out as an independent entity from DB Capital Partners, the private equity group of Deutsche Bank, in February 2003 by the management with the backing of a string of institutional investors. The firm currently manages around $3 billion in assets.