Littlejohn & Company buys Goodyear’s chemicals

The US private equity firm has invested in the French speciality chemicals operation of Goodyear, the tyre manufacturer.

Littlejohn & Company, the US private equity firm, has made a rare appearance in Europe and bought the speciality chemicals business of Goodyear, the tyre giant, for an undisclosed sum.

The deal is the third Littlejohn has completed in Europe in the last five years. It was last seen on the continent in 2000 when it sold French semi-trailer manufacturer General Trailers to Apax Partners. The firm made more then 40 per cent IRR on that deal, said Ed Feeley, a partner at Littlejohn.

Goodyear's speciality chemical business employs around 400 people and has factories in France and the US. The business, which will be renamed Eliokem, manufactures paint resins, coatings and print toners and rubber and plastic anti-degradants. In 2000, the firm generated sales of more than $120m.

“We have done chemical deals in the past, but prior to 2001, we stayed away because prices were too rich. Now values are much more fair,” said Feeley. “The company has a lot of growth potential and sits well with our investment strategy.”

Littlejohn specialises in investing in mid-size companies in operational difficulty, taking majority stakes in its investments, and committing between $50m and $75m each time. These companies usually generate revenues of between $200m and $800m, and operate in a number of sectors including industrial equipment, chemicals, automotive, food processing and healthcare.

The plans for Eliokem include improving the US operations, said Feeley. “This will involve the French management team taking more responsibility for the US. There is a lot of growth potential in the US and we will make capital investments to increase productivity and get products out into the marketplace,” he said.

The investment is from the firm’s second fund, which stands at $530m. Feeley said the fund has a 20 per cent allocation for Europe, “and as this deal takes the total committed to less than 10 per cent, we will most likely make two more investments in Europe.”

ING Bank and Natexis Bank Populaire are the lead lenders underwriting the senior bank facility.