PQ Group Holdings Inc. announced that it has entered into a definitive agreement to sell its Performance Chemicals business to a partnership established by Cerberus Capital Management, L.P. and Koch Minerals & Trading LLC for a purchase price of $1.1 billion.
PQ’s Performance Chemicals business includes sodium silicate and silica derivatives.
“We are excited by today’s announcement for the sale of our Performance Chemicals business at a favorable valuation,” said Belgacem Chariag, PQ’s Chairman, President and Chief Executive Officer.
“In 2019, we laid out a “Simpler + Stronger” strategic path aimed at driving greater value for our shareholders. The plans we set in motion are now coming to fruition. At year-end 2020, we completed the sale of the Performance Materials business as a first step. With this agreement to divest the Performance Chemicals business, we are accelerating the next and most critical step in our strategic transformation. Our core Refining Services and Catalysts Technologies businesses represent a unique opportunity to reposition PQ as a pure play, high growth company.”
Upon the anticipated close in 2021 and finalization of net cash proceeds, PQ plans to return capital to shareholders through a special dividend of $2.50 to $3.25 per share (subject to Board approval and declaration), which is expected to result in a debt reduction of $450 million to $550 million.
Citi is serving as lead financial advisor with BMO Capital Markets Corp. as co-advisor, and Ropes & Gray LLP is serving as legal counsel to PQ in the sale of Performance Chemicals. Jefferies, LLC served as financial advisor, and Kirkland & Ellis LLP served as legal advisor, to Cerberus and Koch. Jones Day served as legal advisor to Koch.
In addition, on February 25, 2021, PQ signed an agreement to acquire Chem32, LLC from its founders for a purchase price of $44 million to complement our Refining Services business.
Chem32 is a leading supplier of catalyst pre-activation services used in the production of traditional and renewable fuels. This addition, with its patented technology and services, is expected to grow rapidly and generate strong margins.
“We are very excited to welcome the Chem32 team,” said Kurt Bitting, President of PQ’s Refining Services business. “Chem 32 diversifies our service offerings while giving us exposure to the rapidly growing renewable fuels industry.”