The blending of two plastics giants

DN Staff

April 8, 1996

4 Min Read
The blending of two plastics giants

Bayer AG's recent acquisition of Monsanto's styrenics business, which includes ABS and SAN resins, has blended two leaders in the plastics industry.

Design News: What were the terms of the acquisition?

Noble: Bayer paid about $580 million for the styrenics business, which is expected to add about $700 million in annual gross revenues. The acquisition will make Bayer one of the largest suppliers of ABS in Europe and the U.S. The acquisition affects about 1,400 employees worldwide.

Acquired facilities include a plant in Addyston, OH; the Applications Development Center in Springfield, MA; and the Automotive Tech Center in Detroit. Monsanto will continue to operate other acquired facilities in Muscatine, IA; LaSalle, Quebec; and Antwerp, Belgium.

Q: Why did you acquire the styrenics business?

A: We believe the acquisition is a natural fit for expanding Bayer's global product line, and it will significantly enhance our position in the engineering resins industry. Our polycarbonate and PC/ABS blends are used in many of the same markets as ABS, so we already have that depth of market knowledge, and, in fact, are already serving many ABS customers. ABS and SAN round out our product line, so many of our customers can now think of us as a one-stop resin supplier.

We also will realize efficiencies by merging the styrenics units with Bayer's engineering resins. Such efficiencies include an expanded product line that will be serviced by one sales force, combined shipping and warehousing services, and combined order processing.

And because Bayer has always been a supplier of ABS in the European markets under the Novodur name, we already have a strong product knowledge within our company. This also creates another opportunity for us to serve the global market. We see global strategic partnerships with major OEMs as being very real with this acquisition.

Q: What industries present the greatest opportunities following this acquisition?

A: There are many. The ABS grades will strengthen our overall position in the automotive marketplace, where Bayer's thermoplastics and polyure- thanes already have strong positions. We see us having a greater presence in interior trim with the new products.

The appliance industry is another growth market. Currently we supply polycarbonate for refrigerator crisper trays, and we are the leading supplier of polyurethane refrigeration insulation systems. ABS resin expands our appliance applications to include refrigerator liners.

The acquisition also will open new segments of the market in consumer goods, including vacuum cleaners and power tools, as well as expand our business in the business machine industry, including computer housings, office machinery, and floppy disks. And both new product lines already are well accepted by the medical industry. In fact, Monsanto was the ABS leader for this industry, which dovetails nicely with our number one position for polycarbonate. We now offer the broadest line of clear and transparent materials to the medical industry.

Q: How will the new business be incorporated into Bayer?

A: We have reorganized our plastics business to integrate styrenics, which doubles the size of the plastics department. The reorganization will allow us to enjoy the benefits of both a product- and market-driven organization, and will let us emphasize other areas, such as extrusion, which were not as important in the past.

Because Monsanto is working with us during the transition, we have been operating in a business-as-usual mode to not disrupt our customers' business. There has been no interruption in plant operations and manufacturing since the acquisition, and our new customers are following normal ordering procedures.

Q: Will the acquisition result in any product line consolidation?

A: There are some grades of Bayblend PC/ABS and Triax PC/ABS blends that have very similar performance and properties, so we will probably eliminate this overlap, but not any of the specialty grades.

We will keep Lustran in the U.S. and Novodur in Europe for the immediate future. We will be evaluating whether or not to consolidate the product line based on the marketplace and our customers' needs, while recognizing that Monsanto's trade names have strong recognition in the marketplace.

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