Cytec to shed Building Block unit

Woodland Park, N.J.-Cytec Industries Inc. said Jan. 31 that it has reached a definitive agreement to sell its Building Block Chemicals business, with 2010 sales of $600 million, to an affiliate of HIG Capital LLC. Total consideration to be received of $180 million includes cash consideration of $165 million at closing and a note for $15 million. The unit’s product lines include acrylonitrile, sulfuric acid, and melamine, which are produced mostly for third-party sale. The unit is an industrial buyer of anhydrous ammonia. In the case of acrylonitrile and melamine, a portion of the production is for internal use, with acrylonitrile used in the manufacture of carbon fiber and melamine used in the manufacture of certain coating resins. All products are manufactured at its world-scale, highly integrated facility located in Fortier, La. Included in the transaction are the sales, marketing, manufacturing, R&D, and technical service personnel, and the aforementioned manufacturing site in Fortier. At closing, the companies will also execute long-term supply agreements for acrylonitrile and melamine at market pricing. The purchaser has agreed to offer employment to the approximately 445 employees who are involved in the operations of this business. “This transaction, when completed, will allow us to put more attention and resources on our core growth platforms of Engineered Materials, In Process Separations and Waterborne and Radcure Coating Resins, focusing on organic growth and possible bolt-on acquisitions,” said Shane Fleming, Cytec chairman, president, and CEO. “With an outstanding performance in 2010, it is an appropriate time to divest the business.” Excluding the impact of the anticipated gain on this transaction and the loss of operating earnings related to the divestiture of the unit, the transaction is expected to reduce Cytec continuing earnings in 2011 by approximately $0.15 per diluted share. This is mostly attributable to the impact of the new supply agreements at market pricing for melamine and acrylonitrile, and assumes current high market prices throughout 2011.