UPDATE 1-Koch Industries to buy propylene maker PetroLogistics for $2.1 bln

(Adds details from statement, background)

May 28 (Reuters) - Propylene producer PetroLogistics LP said it would be taken private by a unit of Koch Industries Inc in a deal worth $2.1 billion, including debt.

The unit, Flint Hills Resources LLC, will pay $14 in cash for each PetroLogistics unit to minority shareholders who own 27 percent of the company. A group of shareholders who control the remaining 73 percent stake will get $12 per unit.

This group includes Lindsay Goldberg LLC, York Capital Management, PetroLogistics' executive chairman, David Lumpkins, and its chief executive, Nathan Ticatch.

Flint Hills is a refining, chemicals and biofuels company.

Koch, with annual revenue of $115 billion, was the second-largest private company in the United States in 2013, according to Forbes. The company is led by brothers David and Charles Koch, two of the world's richest men.

PetroLogistics owns and operates the only propane dehydrogenation plant in the United States. The plant produces about 1.45 billion pounds of propylene annually.

Propylene is a basic petrochemical building block used in making paints, coatings, building materials, clothing, automotive parts and packaging, among other things.

"(PetroLogistics') capabilities are well aligned with our existing chemical and refining business," Flint Hills Chief Executive Brad Razook said.

PetroLogistics' units closed at $12.93 on the New York Stock Exchange on Tuesday.

Goldman Sachs & Co is Flint Hills' financial adviser, while Morgan Stanley & Co LLC and Evercore Partners are financial advisers to PetroLogistics.

Jones Day is Flint Hills' legal adviser, while Weil, Gotshal & Manges LLP and Vinson & Elkins LLP are legal advisers to PetroLogistics.

(Reporting by Swetha Gopinath in Bangalore; Editing by Savio D'Souza and Simon Jennings)