CLEVELAND, Sept. 19, 2018 /PRNewswire/ -- On September 13, MPM Holdings – the parent company of Momentive Performance Materials – was acquired by a group of companies from South Korea for $3.1 billion. Momentive is one of the world's leading suppliers of silicone polymers, and also supplies other silica-based materials such as silanes and quartz.
The acquisition marks the latest chapter in Momentive's tumultuous history. Since being spun off from GE in 2006, Momentive has experienced private equity ownership, mergers, labor strife, bankruptcy, and two attempted IPOs. However, the company remains the third largest silicones supplier in the world, and has enjoyed steady sales growth in 2017 and 2018.
"The South Korean consortium is a great fit for Momentive," according to Kent Furst, silicones market analyst at the Freedonia Group. "The companies include a partner for the silicones business in KCC, a partner for the quartz business in Wonik QnC, and an investment firm to provide funding and take care of Momentive's debt obligations."
The geographic fit is another advantage to the deal. "Over half of Momentive's sales comes from Europe and North America, which are mature markets for silicones," according to Furst. "KCC provides greater access to the fast-growing Asian market."
The acquisition also makes sense from the standpoint of KCC, a company with a sizeable presence in South Korea but smaller sales elsewhere in the world. The silicones market is highly concentrated, with only five companies accounting for about 75% of the world market, according to Freedonia Group research. Because of this, notes Furst, "if KCC wants to become a major global player in silicones, the only way is to acquire an existing market leader."
Learn more about opportunities and challenges in the silicones market here:
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SOURCE The Freedonia Group