The boards of both holding companies have unanimously approved the merger, which is subject to customary conditions. Closing is anticipated to occur on 1 October.

The new company will operate under the Momentive Performance Materials name.

Based in Columbus, Ohio, Hexion Specialty Chemicals is a global supplier of thermoset resins. Hexion is controlled by an affiliate of investment firm Apollo Management LP. Momentive, Albany, New York, produces silicones- and quartz-based speciality materials. Momentive Performance Materials is also controlled by an affiliate of Apollo Management.

The capital structures of both Momentive Performance Materials Holdings Inc and Hexion LLC and their subsidiaries will remain separate and in place. Upon closing, the new Momentive will have 117 production facilities, more than 10 000 associates, pro forma annualised sales of approximately $7.5 billion and adjusted EBITDA of $1.24 billion, making it one of the world’s largest speciality chemicals and materials companies.

Craig O. Morrison, Chairman and CEO of Hexion, will become Chairman and CEO of the combined company upon completion of the merger. Dr Jonathan Rich, President and CEO of Momentive, will join the Board of Directors of the newly formed company and will continue his association with Apollo Management.

The new company will be headquartered in Columbus, Ohio, and will maintain a significant presence in Albany, New York, where its silicones business will continue to be headquartered.

“We believe the time is right to unify these two companies into a global leader in the speciality materials space,” says Josh Harris, Managing Partner and co-founder of Apollo Management. “Once the transaction is completed, the combined company will be able to provide customers with a full range of speciality chemicals and materials and will have significant operations in virtually all major world markets. The transaction does not require any additional financing and will result in significant synergies that will enhance the financial profile of the new Momentive.”

“This transaction will forge an industry leader in speciality chemicals and materials, with significant operations in Asia, Europe and the Americas, a broad product and service profile and excellent opportunities for value creation,” Morrison adds.

Hexion Specialty Chemicals was formed in 2005 through the combination of Borden Chemical Inc, Resolution Performance Products Inc, Resolution Specialty Materials Inc, and Bakelite AG. Momentive Performance Materials was formed in 2006 through the acquisition of GE Advanced Materials.