The consumer push for greener, safer plastics has prompted Eastman Chemical Co., with the help of its lawyers at Jones Day, to acquire a company that produces phthalate-free compounds that make plastic and other materials more flexible.
Jones Day partner William B. Rowland, who led the firm's legal team, said his client will close the all-cash deal to purchase Rosemont, Ill.-based Genovique Specialties Corp. as soon as it gets antitrust approval. "It could close as early as next month," he said.
Financial terms of the deal were not disclosed, but Genovique posted 2009 revenue of $135 million. Kingsport, Tenn.-based Eastman had sales of $5 billion last year. Genovique produces plasticizers, which help make plastics and other materials more flexible. Its plasticizers do not contain phthalates, compounds that have been linked to problems in the human endocrine system. The company also produces benzoic acid and sodium benzoate, antimicrobial products used to lengthen the shelf life of food, beverages and pharmaceuticals. Benzoic acid also is a key ingredient for benzoate plasticizers used to make PVC. Eastman already produces non-phthalate PVC.
The deal itself moved quickly, Rowland said, taking about four months to reach the definitive agreement stage. "It was an auction process," he said. "The target is owned by a private equity group called Arsenal Capital, and they had hired Lazard, an investment banking firm, to conduct an auction for this portfolio company."
Rowland said he didn't know how many other bidders were interested in Genovique, which also has operations in China and Estonia. That's typical in an auction put on by a private equity company, he said, where, after some due diligence, the seller asks for indicative offers and eventually narrows the field of potential bidders.
"You don't know what other people offered or who the other bidders are precisely, though you may get a sense from your industry contacts," Rowland said. "The sellers always want you to think that there are 20 bidders who are hot and heavy."
Genovique sits squarely in a growing market. Regulatory changes and consumer demand, according to information from Eastman, are likely to increase the volume of non-phthalate plasticizers at a compounded annual rate of 7 percent over the next five years in North America and Europe.
Rowland, who has done a number of acquisitions and dispositions for Eastman Chemical over the years, said that in addition to negotiations and mergers and acquisitions work, his firm also looked into environmental, antitrust, real estate and tax matters on the deal, as well as at the legal aspects of purchasing a company from a fund rather than a corporate owner.
Other Atlanta Jones Day lawyers on the deal include partners Michael A. Lee and John E. Zamer, of counsel Charles A. Perry and Christine M. Morgan and associates Heith D. Rodman and Justin R. Hitchcock.
Attorneys from Proskauer Rose represented both Genovique and New York-based Arsenal.