Cytec Announces Agreement to Sell Building Block Chemicals Business
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WOODLAND PARK, N.J., January 31, 2011 - Cytec Industries Inc. (NYSE:CYT-News)
announced today 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 sale is subject to customary closing conditions.
Shane Fleming, Chairman, President and Chief Executive Officer commented, "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.
"With an outstanding performance in 2010, it is an appropriate time to divest the business. I
want to thank the Building Block Chemical employees for their perseverance in the challenging
times and for creating a viable, dynamic business for the future."
The Building Block Chemicals product lines include acrylonitrile, sulfuric acid and melamine
which are produced mostly for third party sale. 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, Louisiana.
Included in the transaction are the sales, marketing, manufacturing, R&D and technical service
personnel and the aforementioned manufacturing site located in Fortier, Louisiana. 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.
Excluding the impact of the anticipated gain on this transaction and the loss of operating
earnings related to the divestiture of Building Block Chemicals, 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. Historically, market
pricing for melamine and acrylonitrile varies widely. The company's policy is to transfer
products between its operating segments at cost versus market pricing, which includes
intersegment sales by Building Block Chemicals. Continuing costs related to Corporate
Services are mostly offset by savings from the recently launched Shared Services initiative
which is expected to be completed by mid-2011.
The effect of the new supply agreements at market pricing, and actions by the Company to
offset its impact have been included in Cytec's recently issued earnings from continuing
operations guidance for 2011.
Mr. Fleming added, "This transaction moves us forward on our strategy of having a greater
portion of our portfolio oriented towards specialty growth businesses and allows us to increase
our focus on driving organic growth plus pursue potential bolt-on or technology acquisitions in
our growth platforms."
About HIG Capital, LLC
H.I.G. Capital is a leading global private equity investment firm with more than $8.5 billion of
equity capital under management. Based in Miami, and with offices in San Francisco, Atlanta,
Boston, and New York in the U.S., as well as affiliate offices in London, Hamburg and Paris in
Europe, H.I.G. specializes in providing capital to small and medium-sized companies with attractive growth potential. H.I.G. invests in management-led buyouts and recapitalizations of
profitable and well-managed service or manufacturing businesses. H.I.G. also has extensive
experience with financial restructurings and operational turnarounds. Since its founding in 1993,
H.I.G. has invested in and managed more than 200 companies worldwide. For more
information, please contact Rick Rosen at (305) 379-2322 or refer to the H.I.G. website at
www.higcapital.com
Use of Non-GAAP Measures
Management believes that net earnings excluding special items and diluted earnings per share
excluding special items, which are non-GAAP measurements, are meaningful to investors
because they provide a view of the Company with respect to ongoing operating results. Special
items represent significant charges or credits that are important to an understanding of the
Company's overall operating results in the period presented. Such non-GAAP measurements
are not recognized in accordance with generally accepted accounting principles (GAAP) and
should not be viewed as an alternative to GAAP measures of performance. A reconciliation of
GAAP to non-GAAP measurements can be found at the end of this release.
Contact:
Jodi A. Allen
(973) 357-3283
