Hexion Holdings Corp. recently announced its plan to separate into two independent companies: Hexion Holdings, comprising the company’s Adhesives and Versatic Acids™ and Derivatives product lines, and Hexion Coatings and Composites (US) Inc. (HCC), composed of Hexion Holdings’ former epoxy-based Coatings and Composites products. HCC will be renamed at a later date.
Hexion anticipates that the HCC separation transaction will be in the form of a distribution of 100% of the stock of HCC, a new and independent company, to current holders of Hexion Holdings common stock and warrants. Upon completion of the HCC spinoff, current Hexion Holdings shareholders will own shares of both Hexion Holdings and HCC.
“Today marks the beginning of an exciting new chapter in Hexion's 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders,” said Craig Rogerson, chairman, president, and CEO. “With our recent strong performance, and after a comprehensive evaluation of strategic actions aimed at unlocking the value of our businesses, our Board and management team have determined that now is the right time to pursue a separation through an IPO and spinoff. The transaction will provide each company with significant liquidity, a sharper strategic focus and appropriately capitalized balance sheets while we continue to serve our customers’ needs. It is a testament to our people and our focus on operational execution that we have reached this successful milestone where our businesses are ideally positioned to be two strong standalone companies.”
Hexion Holdings generated historical net sales of $2.5 billion and pro forma net sales of approximately $1.4 billion in 2020. Hexion Holdings will reportedly continue to build on its momentum, driven primarily by strong new residential construction and remodeling demand in North America, continued capacity expansion progress, and gains from new products, as well as the need for more sustainable building and coatings materials. As a standalone company, Hexion Holdings is expected to have favorable cash flow attributes and a stronger financial profile while maintaining appropriate debt levels going forward.
According to Hexion, HCC will remain a leading global supplier of epoxy resins and systems. It generated total sales of approximately $1.1 billion in 2020. As a standalone company, HCC will have greater ability to grow and expand its leadership position in attractive global markets. HCC is also focused on addressing customers’ demands for more environmentally preferred solutions and providing solutions for the wind energy and automotive industries.
With its senior management team based in Rotterdam, the Netherlands, HCC expects to maintain a significant global presence. Stafford, Texas, will serve as its primary U.S. office, and HCC will also maintain an executive office in Shanghai, China. In addition, HCC will continue to operate epoxy plants in Pernis and Deer Park, Texas, as well as additional manufacturing operations in the U.S., Germany, Spain, and South Korea.
Rogerson will continue to lead Hexion Holdings as chairman, president, and CEO. George Knight will continue in his role at Hexion Holdings as executive vice president and chief financial officer. Ann Frederix, currently senior vice president, Coatings & Composites, Hexion Holdings, is expected to serve as CEO of HCC. Joost Vierhout, currently senior finance director, Global Epoxy and Versatics, Hexion Holdings, is expected to serve as chief financial officer of HCC.
Hexion Holdings and HCC are expected to enter into a shared services agreement, which will provide for Hexion Holdings to provide to HCC, on a transitional basis, certain services or functions that the companies historically have shared, and one or more commercial agreements relating to the ownership, management, maintenance, support, and use of certain shared operations services by Hexion Holdings to HCC. The HCC separation transaction is currently targeted to be completed in the 2021 fourth quarter, subject to final approval by the board of directors, customary regulatory approvals, and tax and legal considerations.
Learn more at www.hexion.com.