Stock prices of Kraton Performance Polymers, a Shell spinoff, have been whipsawed by volatile butadiene and styrene prices since the company went public in 2009. The move to bio comes as North American butadiene supplies are constrained. There has been a reduction in crude C4 feedstocks from ethylene crackers because of increased use of shale gas feedstocks
The company announced an interesting move yesterday in an effort to broaden its market reach, stabilize its finances, and developed alternative feedstocks to fossil fuel chemicals.
Kraton is buying privately held Arizona Chemical for a cash purchase price of $1.37 billion. Arizona Chemical produces specialty chemicals from non-hydrocarbon, renewable raw materials.
“This transformational acquisition will extend Kraton’s technology and market diversification, while substantially increasing profitability and free cash flow, creating a more robust platform for growth and value creation for our stockholders,” said Kraton CEO Kevin M. Fogarty. “In addition, given the renewable nature of Arizona Chemical’s product and technology offerings, the complementary growth we foresee can be accomplished while reducing our overall exposure to hydrocarbon-based feedstocks,”
Kraton makes most of its revenue in low-end paving and construction markets, but has consistently had interesting displays of potential applications for its highly engineered synthetic elastomers at NPE and K shows. Efforts to replace PVC in medical applications have been highly successful, helped by an exhibit at NPE2012. An exhibit on styrenic block copolymer slush molding (another PVC replacement) was a hit of K2010.