Selling nylon carpet fibres

Honeywell announced today that it has agreed to sell its US nylon carpet fibres business to Shaw Industries Group, a subsidiary of Berkshire Hathaway.

Honeywell and Shaw also agreed to a long-term supply agreement for Honeywell to supply Shaw with caprolactam and nylon resin, two intermediate chemicals used in the production of nylon fibres for carpeting and other applications.

Honeywell’s Nylon business is comprised of two operations: fibres and intermediates. Honeywell will retain the intermediates business, which manufactures caprolactam, Aegis nylon resins for various fibre and plastic applications, Sulf-N ammonium sulphate fertiliser and other chemicals.

Financial terms of the agreement were not disclosed. The transaction, which is subject to Hart-Scott-Rodino regulatory review, is expected to close in the fourth quarter of 2005.

Under terms of the transaction, Honeywell will sell its nylon fibre manufacturing operations in Anderson, Clemson and Columbia, S.C., to Shaw Industries, which will also acquire the Zeftron nylon and Anso nylon brand names. Shaw will also acquire Honeywell’s 50 percent stake in Evergreen Nylon Recycling, based in Augusta, Georgia.

These four operations represent approximately 90 percent of Honeywell’s nylon fibre capacity. Honeywell’s nylon fibre operations in Shanghai, China, and Arnprior, Canada, and its textile operations in Anderson, South Carolina, are not part of the transaction.

Honeywell’s Nylon business was expected to post revenues of approximately $1.2 billion in 2005. After the divestiture and with the supply agreement, the remaining business is expected to have annual revenues of approximately $900 million.

Earlier this year, Honeywell sold its US industrial wax operations to IGI International and its Asian and European industrial wax operations to Paramelt. Last year, Honeywell divested its Performance Fibres business. The divestitures are part of Honeywell Specialty Materials’ plan to focus investment on select core businesses built on growth technologies including fluorines, advanced fibres and composites, and electronic materials.