Apollo buys German resins add-on

Borden Chemical, a specialist resins supplier owned by US private equity firm Apollo Management, has acquired Germany’s Bakelite from Rütgers for an undisclosed sum.

Bakelite, a supplier of phenolic and epoxy resins and moulding compounds, has been acquired by Borden Chemical, a US specialist resins supplier owned by private equity firm Apollo Management. The terms of the purchase were not disclosed.

The deal increases Apollo’s presence in the specialist resins sector following its $1.2 billion (€977 million) purchase of Borden Chemical from fellow US private equity firm Kohlberg Kravis Roberts (KKR) in July 2004. 

In a statement, Borden president and CEO Craig Morrison said: “We regard Bakelite as an investment that will greatly expand our international operations, particularly in Europe, extending our range of technology solutions into epoxy resins and other materials.” He added that the firms’ operations were complementary, with most of Bakelite’s sales outside North America and the bulk of Borden’s inside North America.

A source close to the deal said that, because of the strategic rationale, other financial bidders for Bakelite were “way behind” what Apollo could offer. “No-one else came close in terms of available synergies, as well as in terms of the future of the business and its employees,” he said.    

Based in Iserlohn-Letmathe, Bakelite has production facilities in Europe, Asia and the US, has approximately 1,700 employees and posted sales of €489 million in 2003. The firm was the world’s first manufacturer of fully synthetic plastics.

Columbus, Ohio-based Borden Chemical is a producer of binding and bonding resins, performance adhesives and the building block chemical formaldehyde for the wood and industrial markets. It has 48 manufacturing facilities in nine countries.

The sale of Bakelite is the latest step in Rütgers’ divestment of its plastics division. Earlier this year, the chemicals group sold its Isola unit to Texas Pacific Group and Redfern Partners for an undisclosed sum.

Dresdner Kleinwort Wasserstein acted as financial adviser to Apollo on its acquisition of Bakelite, while JP Morgan advised Rütgers on the sale. DrKW advised on three previous sales of German companies to US financial sponsors this year: the sale of Isola to TPG; the $1.7 billion acquisition of chemical distribution firm Brenntag by Bain Capital; and MG Technologies’ sale of its chemicals and plastics operations to KKR-backed Rockwood Specialities Group for an undisclosed sum.   

Its purchase of Bakelite is believed to be the first non-distressed deal completed by Apollo in the German market. Its distressed investments in the country included Iesy Hessen, the cable network it acquired alongside Pequot Capital Management and Golden Tree Asset Management in 2002 and then sold to private equity-backed Kabel Deutschland earlier this year for around two and a half times cash invested.