NEWS OF THE WEEK
KRATON TO ACQUIRE ARIZONA CHEMICAL ODD COUPLE: Firm claims market overlap despite different chemistries N AN UNUSUAL combination of businesses,
Houston-based Kraton Performance Polymers, a specialist in styrenic block copolymers, has agreed to acquire the pine chemicals giant Arizona Chemical for $1.4 billion. Arizona is the world’s largest producer of pine chemicals. The company upgrades the papermaking by-products crude tall oil and turpentine into derivatives such as rosin and terpene resins. Arizona generated $192 million in pretax earnings on $938 million in sales last year. The company was International Paper’s chemical unit until 2007, when it was purchased by the private equity firm Rhône Capital. Its current owner, American Securities, acquired Arizona in 2010. The announcement comes only a week after the unveiling of another major pine chemicals deal: Symrise’s $420 million SHUTTERSTOCK
By purchasing Arizona, Kraton will diversify raw materials away from oil.
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FATAL ACCIDENT AT DUPONT PROBED INVESTIGATION: Chemical Safety Board
calls for inherently safer design review
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CASCADE OF PROCESS ERRORS and inad-
equate safeguards led to the deaths of four workers at a DuPont insecticide plant in La Porte, Texas, says an interim accident report by the Chemical Safety & Hazard Investigation Board (CSB). The board released that report and a related safety video on Sept. 30. “DuPont has long been regarded as a safety leader in the chemical industry,” CSB Chair Vanessa Allen Sutherland says, “but this investigation has uncovered weaknesses or failures in DuPont’s safety planning and procedures.” The interim report is intended to guide DuPont as it restarts the product line that made Lannate, an insecticide, from methyl mercaptan. The Nov. 15, 2014, accident released 24,000 lb of the highly toxic and flammable raw material. CSB
An accident at this DuPont insecticide manufacturing building killed four workers and released 24,000 lb of methyl mercaptan.
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purchase of the terpene chemicals maker Pinova. Kraton, which earned $147 million before taxes in 2014 on $1.23 billion in sales, has been looking to do a deal. Last year the company struck an agreement to merge with the styrenic block copolymers business of Taiwan’s LCY Chemical but walked away months later. Although Arizona and Kraton make products that are chemically different, more than 50% of Arizona’s sales come from markets in which Kraton also participates, according to Kraton CEO Kevin M. Fogarty. Both companies, for example, make asphalt additives and adhesive ingredients. And the two firms both have a presence in lubricants and oil-field chemicals. “We believe this is a compelling, transformational transaction for Kraton, extending our technology and market diversification, while substantially increasing our profitability,” Fogarty told analysts in a conference call when the deal was announced last week. Kraton executives say the combined company should be able to reduce annual costs by $65 million. In a note to clients, UBS stock analyst John Roberts accepted Fogarty’s arguments that the deal would improve profit margins for Kraton and that important markets overlap. Roberts also noted that the deal will lessen Kraton’s reliance on oil-based feedstocks, although end-market risks are similar for both companies. “Carbon is carbon, whether it comes from oil or wood,” he wrote.—ALEX TULLO
First among CSB recommendations is that DuPont conduct an inherently safer design review for its processes using toxic chemicals. DuPont has carried out such reviews in the past, CSB notes, but not for methyl mercaptan or chlorine, which are used at La Porte. The accident followed a series of mistakes, which began days earlier with the inadvertent introduction of water into a methyl mercaptan storage tank. The water, methyl mercaptan, and cold temperatures combined to form a hydrate that blocked the tank’s feed line. Workers warmed pipes to break up the hydrate. They opened and closed valves and vents to redirect the methyl mercaptan while they worked to reduce the hydrate. Eventually operators succeeded, and the piped material began to flow. Meanwhile, in another part of the production line, two workers began a routine mission to drain a vent in a poorly ventilated manufacturing building. The vent piping contained methyl mercaptan because of a jerryrigged configuration to reduce the hydrate. The toxic chemical was released and vaporized, exposing the unprepared workers. The stricken workers immediately called for help. Two others, brothers, responded. All four died. CSB investigator Dan Tillema says that after initial hesitation, DuPont agreed to comply with recommended changes before restarting the process. DuPont did not respond to C&EN’s requests for comment.—JEFF JOHNSON
OCTOBER 5, 2015
