According to an exclusive report published by Reuters, Kraton Performance Polymers is in talks to acquire Arizona Chemical Company, for in excess of US$1.2 billion.

Kraton, which produces engineered polymers for personal care products, is said to be among the bidders in an auction for Arizona Chemical. Other contenders for the pine chemicals manufacturer include private equity firm Advent International Corp and buyout firms Bain Capital and Apollo Global Management.

American Securities, the majority owner of Arizona Chemical, is expected to inform the winning bidder this week.

If successful, the deal would significantly enlarge Kraton, which currently boasts a market capitalization of US$576 million and plans to finance the acquisition with the issue of new shares.