Momentive and Hexion agree merger

Published: 15-Sep-2010

Tie-up to create $7.5bn speciality chemicals group


Parent company of Momentive Performance Materials Inc, Momentive Performance Materials Holdings Inc, and parent company of Hexion Specialty Chemicals Inc, Hexion LLC are to merge to create a global $7.5bn producer of speciality chemicals and materials. The capital structures of both groups and subsidiaries will remain separate and in place but the new company will operate under the Momentive Performance Materials name.

The transaction is expected to close on 1 October, at which point Momentive will become one of the world’s largest speciality chemicals and materials companies, with 117 production facilities located worldwide to serve all major regions, more than 10,000 associates, pro forma annualised sales of around $7.5bn and adjusted EBITDA of $1.24bn. The portfolio will include a broad range of speciality performance products for industrial and consumer markets.

Affiliates of private equity investment firm Apollo Management, LP owns a controlling interest in both Hexion and Momentive, both of which are US-based. Momentive is based in Albany, New York and supplies silicone and quartz-based speciality materials while Hexion is based in Columbus, Ohio and provides a wide range of speciality chemicals.

“We believe the time is right to unify these two companies into a global leader in the speciality materials space,” says Josh Harris, managing partner and co-founder of Apollo Management. “Once the transaction is completed, the combined company will be able to provide customers with a full range of speciality chemicals and materials and will have significant operations in virtually all major world markets. The transaction does not require any additional financing and will result in significant synergies that will enhance the financial profile of the new Momentive.”

On completion of the merger, chairman and ceo of Hexion, Craig O Morrison will become chairman and ceo of the combined company while Jonathan Rich, president and ceo of Momentive, will join the board of directors of the newly formed company and will continue his association with Apollo Management. William H Carter, executive vp & cfo for Hexion, will assume that role in the new company while Tony Colatrella, cfo for Momentive, will assist in the transition. Steven Delarge, Momentive’s president of the Americas, will become president of a new global silicones & quartz division.

Headquarters will be in Ohio, but a significant presence will remain in New York where the silicones business will continue to be headquartered.

“This transaction will forge an industry leader in speciality chemicals and materials, with significant operations in Asia, Europe and the Americas, a broad product and service profile and excellent opportunities for value creation,” says Morrison.

Rich adds: “The complementary technologies of our two companies will enable the combined company to present to customers a full range of innovative solutions for their materials needs. The combination will create a leader in cutting-edge solutions serving a wide range of industrial and consumer product needs.”

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