H.I.G. Capital’s acquisition of Avient Corp.’s chemical distribution business marked the eighth corporate carve-out in the chemicals sector completed by the private equity firm since 2008. The deal is another example of H.I.G.’s expertise in executing complex transactions that are anything but conventional. The distribution business was acquired for $950 million and now operates as an independent company called Formerra.

Complex Carve-Out

Carve-outs are always complex, particularly when the acquisition target does not operate as distinct from the seller’s other business lines. Avient’s chemical distribution arm was one of many business lines operated by the multi-billion dollar public company.

Headquartered in Avon Lake, Ohio, Avient has taken part in numerous M&A transactions, though the company had limited experience in completely divesting a business that it had operated as part of its larger offering for so many years. There were numerous instances during the transaction where things that are simple in ordinary deals became quite complex.

In the end, the deal involved multiple transactions, including an asset purchase, share purchase in multiple jurisdictions across the globe, transition services, reverse transition services and employee leasing arrangements.

Standalone Private Company

As a standalone private company, Formerra is an experienced market participant that is now free to grow its customer base well beyond the limitations imposed by being part of a larger public conglomerate. As a result of the acquisition, the chemical distribution sector gained a new, more nimble, yet highly experienced player in the space.

The sector is very diverse, with a range of competitors balancing geographical distances, supply chain management, quality control and the need for specialized expertise in transporting certain goods. H.I.G.’s investment will allow Formerra to grow its offerings of highly specialized support for critical end market applications in the healthcare, consumer, industrials and mobility markets.

For more Deals of the Year coverage, see Mergers and Acquisitions Names the 2023 Middle-Market Deals of the Year.