Koppers purchases creosote business from KMG Chemicals; agrees to sell utility pole business

Written by Jenifer Nunez, assistant editor

Koppers Inc. has acquired the creosote distribution business of KMG Chemicals, Inc., for $12.5 million plus the fair market value of inventory, which is estimated at $3 million. In addition to inventory, the acquisition includes the transfer of leased railcars and storage tanks from KMG to Koppers, as well as various customer agreements. Operating results from this business will be included in Koppers Carbon Materials and Chemicals business segment.

 

“This acquisition reaffirms our corporate commitment to serve the North American railroad industry in all aspects of crosstie supply from procurement to processing and distribution to preservative supply,” said Tom Loadman, vice president of railroad and utility products and services at Koppers.

“While we expect this acquisition to be additive to our Carbon Materials and Chemicals business segment, the driver for this acquisition was to help ensure consistent supply for this important component of the railroad crosstie treating process,” said Leroy Ball, president and chief executive officer of Koppers. “An anticipated additional benefit of the acquisition is the strategic location of leased tank space which provides an attractive option for importing coal tar to supplement a coal tar-short market in North America. The added flexibility to handle imported raw material will help to mitigate the risk associated with future supply from an uncertain domestic steel industry.”

Additionally, the company has reached an agreement to sell its U.S. utility pole business to Cox Industries, Inc., for an undisclosed sales price. The transaction does not include the sale of Koppers wood treating facility located in Florence, S.C., which was the primary production facility for this business. The Florence facility, which also treats railroad crossties and other products, will remain with Koppers and will continue to provide products and services for the company’s railroad customers.

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