Koppers Holdings has finalized the sale of its share of a joint venture chemical plant in China for $107 million.
The deal is a significant step in the Downtown-based company’s shift from carbon chemicals used in manufacturing to a maker of wood treatment products.
Koppers sold its 75% share of the facility in China’s Jiangsu Province to a subsidiary of Nippon Steel. The remaining 25% is owned by Yizhou Group.
The plant, completed in 2014, distilled coal tar into products used in steelmaking.
Koppers said Wednesday it will realize about $65 million in cash after taxes and expenses and will use the proceeds to reduce debt.
“With our … strategic pivot toward an emphasis on wood treatment technologies, it made sense to consider divesting this business at the right price so we can better focus on core markets and products,” said James Sullivan, Koppers’ executive vice president and chief operating officer.
The company expects to record a gain of $30 million to $35 million in its third-quarter results.
Leroy Ball, Koppers’ president and chief executive, said the sale of another asset in its “more volatile” carbon and chemicals business should prompt investors to “better recognize the higher valuation that Koppers should command in the equity markets.”
In a business update issued last week, Koppers said August sales in its carbon chemicals unit fell by 10% because of “ongoing weakness in industrial production markets.”
Sales of its performance chemicals used for residential and commercial wood treatments jumped by 8% and were driven in part by a strong housing market and spending on home repairs and improvements.
The pandemic has resulted in more people working from home and spending money they may have used in the past on travel or leisure on home remodeling and updates, Koppers said.
Joyce Gannon: jgannon@post-gazette.com
First Published: September 30, 2020, 1:22 p.m.