MOSCOW (MRC) -- Royal DSM, the Life Sciences and Materials Sciences company, and CVC Capital Partners (CVC), one of the world’s leading investment advisory firms, has announced a partnership for DSM’s activities in Polymer Intermediates (caprolactam and acrylonitrile) and Composite Resins through the formation of a new company, provisionally called NewCo, reported DSM on its site.
Feike Sijbesma, Chief Executive Officer and Chairman of the Managing Board of Royal DSM said: "This proposed transaction delivers on the strategic actions DSM announced for these businesses in November 2014 and is a decisive step in further optimizing our portfolio and reducing our cyclicality. We have found a good partner in CVC after a careful process in which we evaluated all options. We believe the partnership with CVC is the best way forward for these businesses. NewCo will operate as an independent, dedicated company under the leadership of CVC. DSM can now focus fully on improving the operational performance of its Nutrition and Performance Materials businesses as well as benefitting from the future value creation in this new venture. This transaction is geared towards value creation for these businesses and is consistent with our commitment to continue to generate value for our stakeholders and deliver on our strategy."
For DSM, this proposed transaction is a logical step in the execution of its strategy as Polymer Intermediates (caprolactam, acrylonitrile) and Composite Resins no longer fit with its more resilient portfolio in Nutrition and Performance Materials. The partnership with CVC allows DSM to further reduce the cyclicality of its portfolio, secure a long-term competitive supply position of caprolactam for DSM Engineering Plastics and fully focus on the Nutrition, Performance Materials and Innovation activities complemented by accelerated actions to improve efficiencies and reduce costs.
As a 35% shareholder in NewCo, DSM will be able to benefit from any improvements in the businesses that will become part of NewCo.
NewCo will continue to supply at least 80% of DSM Engineering Plastics’ caprolactam needs in Europe and North America for the coming 15 years via a drawing rights contract, effectively maintaining DSM Engineering Plastics’ backward integration. In China DSM Engineering Plastics will continue to be supplied by NewCo as today. This secures an ongoing strategic and competitive position for the polyamide 6 business in which DSM is a global leader.
NewCo will operate as an independent company with three business units: caprolactam, acrylonitrile and composite resins. Pro-forma third party sales of NewCo amounted to EUR2.1 billion in 2014 with an EBITDA of EUR106 million, excluding non-controlling interests (DNCC, JDR and Sitech) of €19 million and including the caprolactam licensing income.
As MRC reported earlier, in October 2014, Royal DSM signed a partnership agreement with long fibre thermoplastic (LFT) specialist Plasticomp (Winona, Minnesota / USA) to develop bio-based LFT composite materials based on DSM’s "EcoPaXX" polyamide 4.10.
CVC Capital Partners (CVC) is one of the world's leading private equity and investment advisory firms. Founded in 1981, CVC today has a network of over 20 offices and over 300 employees throughout Europe, Asia and the US. Currently, CVC manages funds on behalf of over 300 investors from North America, Europe, Asia and the Middle East, who entrust their capital to CVC for periods of 10 years or more.
Royal DSM is a global science-based company active in health, nutrition and materials. DSM delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, pharmaceuticals, medical devices, automotive, paints, electrical and electronics, life protection, alternative energy and bio-based materials.
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