(Bloomberg) – Chemtura Corp., a US chemical maker that emerged from bankruptcy four years ago, said it’s more likely to sell itself than make a major acquisition as it evaluates its strategic options.
“There is a lot of interest in the company and the portfolio,” CEO Craig Rogerson said in an interview. “The reality is you create value on a higher probability basis selling than buying right now with the multiples that are out in the market place.”
Chemtura is weighing a sale amid a jump in the volume of diversified-chemical deals in the US, which stands at $21.1 billion so far in 2015. That puts the industry on course for its busiest year of dealmaking since 2007, according to data compiled by Bloomberg.
Rogerson told investors in February that Philadelphia-based Chemtura lacks scale and is looking at options for acquisitions, a sale or merger. Its revenue has shrunk by half after selling businesses including pool chemicals and pesticides.
Chemtura’s four remaining businesses include petroleum additives and bromine, a mineral used in fire retardants and deepwater drilling.
The company may end up taking a “complex” route to selling itself with some potential buyers interested in specific assets, Rogerson said this week in Colorado Springs, where he was attending the annual meeting of the American Chemistry Council.
For instance, a deal could be structured like Monday’s announced sale of OM Group to Apollo Group Management, in which the buyout firm will sell two OM units to Platform Specialty Products Corp. at closing.
Another possibility is a tax-efficient Reverse Morris Trust deal, which involves spinning off a unit that then merges with a smaller company. That’s what Dow Chemical did in March when it agreed to sell its chlorine business to Olin Corp.
“We are kind of ripe for that type of transaction,” Rogerson said.
A formal sale process may develop should Chemtura get a commitment for one part of the company and need to solicit buyers for the rest, he said. Morgan Stanley bankers led by vice chairman Susie Huang are advising Chemtura.
While a large acquisition remains a possibility for Chemtura, Rogerson, 58, said such a deal would need to be in an industry area similar to those it’s already involved if it’s to win support from investors. That narrows the possibilities.
It would be hard for Chemtura to get any bigger in bromine, urethanes or organometallics, and it would need to look downstream into customers’ markets to make an acquisition in petroleum additives, he said. An adhesives purchase is possible, he added.