Two private equity firms are in talks to acquire specialty-chemicals company Chemtura Corp., a person familiar with the situation said.
Blackstone Group LP and Apollo Management LP are considering acquiring Chemtura, according to the person who asked not to be identified because he was not authorized to speak publicly about it. The Middlebury-based company makes plastic additives and flame-retardant materials.
Chemtura announced in December it is considering strategic alternatives that could include divestitures, acquisitions or a sale, merger or other business combination.
Analyst Rob Felice at Gabelli & Co. said the sale of Chemtura would not be a surprise, and that the company is a good target for buyers. It could fetch $11 or $12 a share, he said. Shares of Chemtura closed at $8.49, up 69 cents, or nearly 9 percent.
However, the biggest barrier to a potential deal could be financing due to the weak economy, Felice said.
“Private equity has been fairly sidelined at this point,” he said. “If a deal comes about, it would be one of the first deals we’ve seen get rolling.”
Shortly after it was formed in 2005 by the merger of Crompton Corp. and Great Lakes Chemical Corp., Chemtura was hurt by hurricanes Katrina and Rita, which disrupted supplies used for its products, Felice said.
“It started a string of eight, 10 quarters of lackluster performance,” he said. “It’s a company built around mergers and acquisitions. I don’t think the businesses were ever really integrated properly.”
The company re-evaluated its portfolio and has divested itself of several businesses and cut costs, Felice said.
Chemtura spokeswoman Debra Durbin said the company will issue a news release when it completes its strategic review. A spokesman for Apollo would not comment.
Chemtura, which has about 5,600 employees, makes pool and spa products, seed treatment and pesticides for the agricultural market and urethane polymers.
It reported revenue of $3.7 billion in 2007, up more than 8 percent from about $3.5 billion the previous year.
Talks to buy Chemtura were first reported by the Financial Times.
