Styrolution Owners May Sell Shares to Public in 2015, CEO Says

Styrolution Group GmbH, the plastics venture formed by BASF SE and Ineos Group Holdings Ltd., may hold an initial public offering as soon as 2015, Chief Executive Officer Roberto Gualdoni said.

Other options include Ineos buying BASF’s 50 percent stake or a sale to an industry investor, Gualdoni said yesterday at a press briefing in Frankfurt, where the company is based. A change in ownership could come as early as February as Ineos has an option to buy BASF’s stake at a fixed price, he said.

“BASF has already said they want to exit, so that is just a matter of time,” Gualdoni said. “An IPO is possible, but it wouldn’t come next year, 2015 is possible.”

Styrolution, formed in October 2011, has set itself the goal of generating half of its sales from specialty products and half of revenue from emerging markets by the end of the decade. Growth will come from building up existing operations as well as potential acquisitions, the CEO said.

The maker of polystyrene and acrylonitrile butadiene styrene, or ABS, a lightweight, robust plastic used in mobile-phone housings, vacuum cleaners and power tools, posted pro-forma sales of 6 billion euros ($8 billion) last year. Earnings before interest, tax, depreciation, amortization and one-time items was 335 million euros.

The German company plans to “significantly” beat 2012’s operating profit this year and push margins into the double-digit range by the end of the decade, Chief Financial Officer Christoph de la Camp said at the briefing. The company is on track to cut 200 million euros a year in costs by upgrading factories and reducing the number of information technology systems in use.

Ebitda Formula

Styrolution’s future ownership will depend on its earnings. As well as Ineos’ option to buy the 50 percent it doesn’t own from February, BASF has an option to sell its stake to Ineos from October next year, Gualdoni said. Both options expire in 2016. The price would be determined by a formula based on a multiple of Ebitda before special items, he said.

While the CEO declined to say which multiple had been agreed, he acknowledged that the price for commodity companies at the end of 2011, when the agreement was made, was at about five to seven times Ebitda. The middle of that range would give Styrolution a value of about 2 billion euros including debt, based on 2012 earnings.

The company, which has 3,200 employees, settled on Frankfurt for its headquarters because it inherited assets in Ludwigshafen, to the south, and Leverkusen, to the north of Germany’s financial capital. Frankfurt was “neutral ground,” the CEO said.

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