US analysts split on bidding war for Hercules

14 July 2008 16:22  [Source: ICIS news]

HOUSTON (ICIS news)--Analysts issued on Monday clashing opinions as to whether a third company would offer a higher bid for Hercules.

US water chemicals producer Ashland has proposed buying Hercules for $3.3bn (€2.1bn) or $23.01/share. The deal could close by the end of 2008.

Ashland's offer undervalues Hercules, said Dmitry Silverstey, an analyst with Longbow Research.

Hercules has opened new cellulose plants in China, and its Aqualon product continues to grow and improve pricing, he said. Moreover, the company has done much to clean up its balance sheet.

As such, either Ashland or a third company could offer a higher bid, Silverstey said.

David Beglieter, an analyst with Deutsche Bank, doubts that a higher bid would emerge.

Hercules has an asbestos liability of at least $230m and an underfunded pension plan of $160m, he said. Beglieter also mentioned cross-currency swaps.

($1 = €0.63)

To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2645

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly