11 July 2008 20:58 [Source: ICIS news]
By Joseph Chang
“Part of our strategy has been to find the right property to bring into our corporation, and this fits us well as we will now have 75% of EBITDA [earnings before interest, tax, depreciation and amortisation] from specialty chemicals,” said O’Brien. “This defines the company with a core platform.”
The deal values Hercules at 8.4x EBITDA for the 12 months ended in March. Dow Chemical is buying specialty chemical firm Rohm and Haas for 11.5x EBITDA.
The deal marks the first large transformational deal for
“We were attracted by Hercules’ renewable chemistries in its Aqualon business, as well as its growing paper chemicals business,” said O’Brien. “Paper chemicals gives us a strong vertical business to grow from and it has adjacencies with our industrial water treatment business.”
“Hercules is big in the paper making process and product development area while
Cost savings will come from headcount reduction as well as plant rationalisations across the group, O’Brien said.
“Hercules rose to the top of our target list, and we really started re-engaging in talks in May this year,” said O’Brien. “Once we started that process it went pretty quickly. We spent a lot of time looking at this deal.”
“Even though things are not perfect in the external environment, we are optimistic and believe things will get better,” he added. “So during times when conditions aren’t strong, we see the opportunity to build the teams to be ready when things turn for the better.”
As for Ashland Distribution and Valvoline, O’Brien described them as “complementary adjacencies,” which
($1 = €0.63)
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