The Urethane Blog

Momentive Sold

Momentive plant part of $3.1B sale to Korean conglomerate, investors



A Waterford chemical plant is part of a $3.1 billion merger transaction announced Thursday with two conglomerates and an investment group from South Korea.

MPM Holdings Inc, which owns the Momentive Performance Materials silicone plant on Route 32 where about 1,000 people work, will be acquired by the investment group, SJL Partners; KCC Corp., a Seoul-based chemicals company; and Wonik WnC Corp., a Seoul maker of quartz and ceramic products for the semiconductor industry.

With about two dozen manufacturing facilities globally, MPM is the third-largest maker of silicones, resins, and adhesives in the world. KCC currently ranks fifth, and the combined entity would become the second-largest in that sector.

“The transaction will not only allow our silicones and quartz businesses to benefit from KCC and Wonik’s industry expertise but will also further enhance Momentive’s global leadership position by expanding our portfolio of products, broadening our geographic reach and strengthening our financial position,” said Jack Boss, CEO of Momentive Perfomance Materials.

“There are no planned changes at Waterford as a result of this transaction and we expect the transaction to result in growth and job creation,” according to a company statement.

Expected to close in the first half of 2019, the transaction is being supported by an undisclosed amount of new debt.

The deal also includes “the assumption of net debt, pension and (post-employment benefit) liabilities,” according to a company press release. MPM has about 5,200 workers worldwide.

The merger has already been approved by the boards of directors for Momentive and its stockholders, as well as the boards of KCC, Wonik, and the SJL’s investment committee, according to the release.

Momentive shareholders will be paid $32.50 for each share of the company. The company is privately held among several hedge funds with billionaire owners.

There were about 48.1 million outstanding shares in MPM Holdings in August, according to filings with the federal Securities and Exchange Commission. So those shares would be worth about $1.5 billion under the merger agreement.

However, a Westchester County law firm also announced Thursday that is is investigating “potential claims” against MPM and its board of directors for “breach of fiduciary duty concerning the proposed acquisition of the company.”

Rowley Law represents shareholders nationwide in “class actions and derivative lawsuits in complex corporate litigation,” according to a statement by partner Shane Rawley, who declined further comment.

An MPM company spokesman declined comment on the law firm’s announcement.

The MPM stock price has been climbing steadily since February 2017, when a 105-day strike by about 700 unionized workers at the Waterford plant was settled. At that time, shares were valued at about $10, according to Yahoo Finance.

The stock price had climbed to $20 by early 2018, and hit $30 by May 2018.

News of the potential merger appeared in an English-language South Korean newspaper on Aug. 1., with KCC officials quoted in the Korean JoongAng Daily saying that no decisions had been made. The stock price climbed to $40 by mid-August, and peaked at $42 on Wednesday morning.

Bu the stock dropped sharply that afternoon, settling at $32.50 at the end of the day. A joint press release on the agreement and the MPM stock buyout price of $32.50 was issued 1:17 a.m. Eastern Daylight Time Thursday morning, according to Business Wire, an online public relations service.