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Honeywell to spin out resins and chemicals business

May 12, 2016
Energy & Chemical Value Chain

Honeywell announced today that it will spin off its $1.3-billion resins and chemicals business into a stand-alone, publicly traded company by early 2017.

The new company, named AdvanSix, will be a leading manufacturer of nylon 6 resin, caprolactam, and other chemical intermediates. The transaction will be tax-free to Honeywell shareholders. Honeywell expects to file a Form 10 with the SEC shortly.

Post-split, Honeywell and AdvanSix will each have a more focused business and be better positioned to invest more in growth opportunities and execute strategic plans best suited to its respective business, says Honeywell chairman and CEO Dave Cote. “Our $1.3 billion Resins and Chemicals business enjoys a leading position in the industries it serves and a global cost advantage,” he adds. “It is favorably positioned to continue to achieve global growth as a standalone enterprise, with added flexibility to make capital investments that enhance its offerings and service to customers.”

AdvanSix also produces ammonium sulfate fertilizers, phenol, acetone, and cyclohexanone.

Erin Kane will serve as president and CEO of AdvanSix upon completion of the transaction. Kane currently serves as v.p. and general manager of the resins and chemicals business, a position she has held since October 2014. She joined Honeywell in 2002 and has held numerous marketing, management, and business director roles in resins and chemicals and other businesses within Honeywell. Prior to joining Honeywell, Kane held six sigma and process engineering positions at Elementis Specialties and Kvaerner Process.

According to IHS Chemical’s Global Nylon Fibers & Feedstocks Monthly Market Report, Honeywell’s 350,000 m.t./year nylon 6 plant at Hopewell, VA is about one third of North American supply. “The plant has been cost advantaged in recent years as they produce much of their own feedstock from their own phenol and have found lucrative fertilizer markets for their ammonium sulfate bi-product,” the report adds.

Meanwhile, Chinese producers have put pressure on margins in caprolactam in recent years. DSM sold a 65% stake in its caprolactam and resins business to private equity firm CVC Capital Partners (London) last year, aiming to focus on its nutrition business and reduce cyclicality.

Bloomberg reported in April that Honeywell was considering the sale, and that the businesses in question could be worth up to $1 billion. Honeywell shares were trading roughly flat Thursday morning.

By Rebecca Coons

Source: Chemical Week

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