SK Closes Carve Out from PolyOne

SK Capital has completed its acquisition of the performance products and solutions business (PPB) of PolyOne Corporation for $775 million.

PPB is comprised of Geon Performance Materials, a maker of polyvinyl chloride (PVC) compounds; and Producer Services, a maker of a range of formulated polypropylene and thermoplastic polyolefin products, and a provider of contract manufacturing services.

PPB’s products are used in a wide range of sectors including appliances, building and construction, electronics, healthcare, transportation, and wire and cable. PPB, with annual sales of approximately $700 million, has twelve manufacturing locations across North America and Asia and has 1,100 employees.

PPB dates to 1927 when BF Goodrich discovered and produced the first usable vinyl polymer. In 1948 the company created a vinyl plastic division based on this technology and later, in 1993, spun off the division through a public offering creating The Geon Company.

At closing, SK Capital has returned PBB to its roots by renaming it GEON Performance Solutions with a headquarters near Cleveland in Avon Lake, OH. Dave Mezzanotte, a director of SK Capital will serve as the interim CEO of GEON. “GEON is a storied leader in the compounding industry, having pioneered and advanced the formulation of vinyl plastics for more than 70 years.  We look forward to supporting the growth and improvement of the company through investments in talent, innovation and market expansion,” said Jack Norris, a managing director of SK Capital.

PolyOne (NYSE: POLY) is a provider of materials and services including specialty polymer formulations, color and additive systems, polymer distribution and specialty vinyl resins. The company had revenues in 2018 of $3.5 billion and has 60 manufacturing sites and 9 distribution facilities in North America, Europe, Asia and South America. PolyOne, headquartered near Cleveland in Avon Lake, OH, was formed in 2000 from the merger of M.A. Hanna Company and The Geon Company.

“We conducted what became a very competitive bidding process for our PPB segment,” said Robert Patterson, the chairman, president and CEO of PolyOne. “Ultimately, we determined that divesting the business to SK Capital Partners would provide greater flexibility to accelerate our specialty growth strategy and is in the best interest of customers, employees and shareholders.”

SK Capital invests in the specialty materials, chemicals and pharmaceutical sectors and typically invests equity of $100 million to $200 million in each portfolio company. In February 2019 the firm held a final closing of SK Capital Partners Fund V LP with total committed capital of $2.1 billion. The firm’s earlier fund was raised in 2014 with $1.0 billion of capital. SK Capital is headquartered in New York.

HSBC was the financial advisor to PolyOne on this transaction. Debt financing was provided by Cerberus Business Finance.

© 2019 Private Equity Professional | October 29, 2019

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