Chemtura in talks with PE firms Blackstone, Apollo

Private equity firms Blackstone Group LP and Apollo Management LP, both basd in New York, are reported to be in early stage discussions to acquire chemicals maker Chemtura Corp, which reported an operating loss of $6 million in the three months ended 31 March compared with an income of $11 million in the same period last year.

While the two are said to be finalising financing for the deal, Chemtura would not comment, saying its strategic review was still underway and it would issue a communique in the event of developments.

Apollo and Blackstone are familiar with the cehmicals industry with the latter having teamed up with Goldman Sachs in 2003 to acquire water treatment and process chemical technologies company Nalco Holding's predecessor. Similarly, Apollo owns Hexion Specialty Chemicals Inc, which bid $10.8 billion in June last year to acquire Huntsman Corp (See: Basell Polyolefins to buy Huntsman), though the deal been held up due to regulatory hurdles.

If the potential  buyout of Chemtura materialises, it would be the fifth deal of over $1 billion taking a listed company private. In December the chemicals maker had begun weighing strategic alternatives, for which it hired investment banker Merrill Lynch to help with the review, after attempts to sell itself failed. It then began looking at alternatives including divestitures, acquisitions, changes to its capital structure or a possible outright sale or merger of the entire company.

Subsequently in January, it agreed to sell its global oleochemicals business to PMC Group for an undisclosed sum followed by the sale of its fluorine chemicals business to DuPont Co next month. Prior to announcing its strategic review, Chemtura had sold its optical monomers business to Acomon AG, an affiliate of Munich private equity firm Auctus Management GmbH & Co. KG. According to the chemicals maker, theses sales were part of its efforts to strengthen its main businesses, including its polymers additives portfolio.

However, taking the certainity of taking Chemtura private remains bogged down in the wrangling over its valuation, which on the basis of its current stock price of $8.47 has been pegged at around $3 billion, including debt.

However, its range of analystst feel the diversity of its businesses could put off potential acquirers - Chemtura has a presence in, consumer products like pools and spas, crop protection and fumigants, domestic cleaners, pools and spas, petroleum additives and flame retardants, and performance specialties, which consists of urethanes and petroleum additives and lubricants.

Chemtura was formed through Crompton Corp's acquisition of Great Lakes Chemical Corp. for $1.8 billion in 2005. In 2007 it had combined sales of  $3.75 billion, up from $3.46 billion in the previous year.