Analyst says timing may be right for Styron IPO

ERJ staff report (PN)

Berwyn, Pensylvania -- Global polystyrene leader Styron LLC -- which is changing its name to Trinseo SA later this year -- is planning an intial public offering of stock.

Dow Chemical Co. sold Styron -- its market-leading styrenics business -- to private equity firm Bain Capital LLC last year for $1.6 billion. The company is based in Berwyn, Pa.

In a filing with the Securities and Exchange Commission, Styron said it plans to sell up to $400 million in ordinary stock through an IPO. The company plans to use part of the proceeds to repay debt. No date for the IPO was mentioned in a June 28 news release from the firm.

“Styron has delivered strong results and has positive growth momentum,” spokeswoman Donna St. Germain said June 30. “By going to the public markets, we can continue to build on that.”

Styron also makes ABS, SAN polymers, styrene-butadiene latex and synthetic elastomers, expanded PS and polycarbonate. Rumors of a potential IPO for the firm first surfaced in March, when it was reported by Bloomberg News.

Styron posted sales of $5 billion in 2010. The firm employs around 2,100 at 20 plants worldwide.

The most recent materials-related IPO in the plastics market took place in late 2009 when Kraton Polymers was taken public by financial firms JPMorgan Partners LLC and TPG Capital LP. That move has worked out well for investors, as Kraton's per-share stock price debuted at less than $14, but was near $39 in early trading June 30.

Styron may be timing its IPO right, since the global economy appears to be in the early stages of recovery, said Michael Sison, a stock analyst with KeyBanc Capital Markets in Cleveland.

“Chemical companies tend to outperform in the early parts of economic recovery,” Sison said. “Year-to-date, that group [of stocks] has done fairly well. That could bode very well for Styron.”

Styron “would be an integrated chemical company with some commodity products and some specialty chemicals,” he added. “They're in the styrene/butadiene chain, which remains very tight. It's an environment that, on a fundamental basis, could allow Styron to show good results for the next several quarters.”

In PS, Styron is believed to have the world's most capacity, with a 13 percent market share. It operates three styrenic plastic plants in Europe, three in Asia, and a US plant in Midland, Mich. Styron also includes Dow's 50 percent share in Americas Styrenics LLC, North America's largest PS maker.

Styron generates almost 60 percent of its sales from plastics -- including PS, ABS and polycarbonate -- with the remainder coming from emulsion polymers such as latex and synthetic rubber. Key end uses for Styron products include appliances, consumer electronics, information technology equipment and packaging.

Officials with Styron previously said that the firm's investment in its North America operations center in Midland and in other Midland facilities will be up to $13 million over the next five years.

From Plastics News (A Crain publication)