Gulf Coast petrochemicals maker TPC Group Inc. on Monday agreed to be taken private by First Reserve Corp. and SK Capital Partners in a cash-and-debt transaction valued at $850 million.
The Houston-based company produces specialty chemical products that include butadiene and high-purity isobutylene for industrial use and manufacturing. Facilities are along the Gulf Coast on the Houston Ship Channel, in Baytown and Port Neches, TX, as well as in Lake Charles, LA.
However, TPC’s management has been scouting options since late last year after it was forced to write down the value of its inventory. Butadiene production capacity was reduced in April 2009.
“As a growth equity investor, First Reserve is looking forward to helping TPC Group expand its core business to capitalize on the advent of the shale plays in North America and the resulting increase in supply of natural gas and natural gas liquids,” said First Reserve Director Neil Wizel.
Private equity’s First Reserve is primarily focused on global energy industry investments, while SK Capital equity looks for opportunities in chemicals and specialty products.
U.S. onshore operator Crestwood Midstream Partners LP is a First Reserve portfolio company, created from the acquisition of Quicksilver Gas Services for about $700 million (see Shale Daily, Dec. 8). Crestwood initially focused only on the Barnett Shale but subsequently spread its activities to the Fayetteville Shale, Granite Wash, Avalon Shale and Haynesville/Bossier Shale, where it operates 11 different pipeline systems.
On Monday Crestwood said it had completed buying some gathering and processing assets from subsidiaries of Devon Energy Corp. for $87.1 million (see related story; Shale Daily, July 25). Last year First Reserve also created a joint venture with Appalachian operator Energy Corp. of America that initially is building gas gathering systems in the Marcellus Shale (see Shale Daily, Oct. 12, 2011).
SK Capital Managing Director Jack Norris said the partnership would leverage “the strengths of our respective sector franchises and positions us well to support management’s growth initiatives.”
Under the deal, TPC shareholders would receive $40/share. The NASDAQ stock ended Friday at $39.59. The TPC board has approved the transaction. Pending a shareholder vote and regulatory approval the transaction is expected to be completed before the end of the year.
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