Soros deal completes Bayer divestments

German chemical groups Bayer and Degussa have sold their German latex joint venture business to Soros Private Equity in a E235m transaction.

Soros Private Equity, the private equity business controlled by Hungarian financier George Soros, has bought PolymerLatex, the German-based latex products joint venture of Bayer and Degussa in a deal worth E235m.


The sale of PolymerLatex completes the divestment programme which Bayer launched at the end of 2001 as part of its reorganisation to reduce company debt. Degussa said the sale was part of its plans announced in 2001 to focus on speciality chemicals.


Divestments from Bayer include the sale of a 30 per cent interest in Agfa, a large proportion of the Bayer company apartments and the E1.66bn sale of subsidiary business Haarmann & Reimer to EQT Partners in August last year. The latest sale brings the company’s debt below the E10bn mark.


The joint venture, set up in 1996 by Degussa and Bayer, produces latex products in the paper, moulded foam and speciality applications fields, and is one of the leading latex suppliers in Europe. In 2001, PolymerLatex generated sales of E344m in with 2001 and employs 730 people across five sites in Europe.


Soros is the latest private equity houses to snap up divested units of European conglomerates with the chemicals industry proving to be of particular interest. In 2002, Bain Capital acquired three chemical units from French specialist chemicals group Rhodia in November, following similar deals to acquire Trespaphan, Celanese AG's global oriented polypropylene (OPP) film business and SigmaKalon, Europe's second largest decorative paint maker, for around E1bn from TotalFinaElf. Close Brothers Private Equity recently acquired the mining chemicals business of Burmah Castrol to from BP in January.


Soros was introduced to the deal by Commerzbank Securities. Matthew Roeser, London-based head of Commerzbank's financial sponsors group, commented that close relationships with Bayer and Degussa allowed the bank to advise on a solution that suited both vendors in terms of timing and price and enabled the Soros to meet its requirements as well. 


As well as providing M&A advice, Commerzbank also acted as sole mandated lead arranger of the senior debt facilities supporting the transaction.


Soros Private Equity Partners is a global private equity investor, currently managing in excess of $4bn of equity capital. Soros said it intends to develop PolymerLatex's operations in the coming years and will consider possible add-on-acquisitions to consolidate its market share.