PQ Group Holdings has announced that it entered into a definitive agreement to sell its Performance Materials business for a purchase price of $650 million to an affiliate of The Jordan Company, L.P. (TJC), a U.S. middle-market private equity firm that was founded in 1982.

 

“The planned sale of Performance Materials at an attractive valuation marks a significant milestone on our ‘Simpler and Stronger’ strategic path, as we target a portfolio reflecting both higher top-line growth and higher margins,” said Belgacem Chariag, PQ’s Chairman, President and Chief Executive Officer.

 

“Our end goal for the Simpler and Stronger plan is to focus PQ on its high-growth, high-margin Catalysts and Refining Services businesses. This focused portfolio is well positioned to use its technology and service offerings to help customers drive sustainability by more efficiently producing the lightweight polymers and clean fuels that are expected be in high demand going forward. As a result, we are also launching a review of strategic alternatives for Performance Chemicals – a healthy business with customers and attributes that are distinct from our Catalysts and Refining Services segments.”

 

Chariag added, “Finally, given our strong cash generation and expected proceeds, we are expanding our capital allocation policy beyond reinvestment and debt reduction to now include special dividends.”

 

The company expects to use after tax cash proceeds from the sale of its Performance Materials business, along with a portion of existing cash balances, to reduce debt by approximately $460 million while also allocating up to $250 million, or $1.84 per share, to a planned special dividend to shareholders that is subject to board approval and declaration.

 

The sale of Performance Materials is anticipated to close by the end of 2020, subject to regulatory approvals and customary closing conditions.

 

Goldman Sachs & Co., LLC and Harris Williams LLC are serving as financial advisors and Ropes & Gray LLP is serving as legal counsel, to PQ. Kirkland & Ellis LLP is serving as legal counsel for TJC.