April 20, 2024

DealBook: Ashland to Buy Chemical Company for $3.2 Billion

James J. O'Brien, chairman and chief executive of Ashland.James J. O’Brien, chairman and chief executive of Ashland.

Ashland, the chemicals company, said on Tuesday that it had agreed to buy the privately held International Specialty Products for $3.2 billion in cash.

International Specialty is the chemical company that was spun off from GAF in 1991 by the deal maker Samuel J. Heyman. Mr. Heyman took International Specialty private in 2003 in a $134 million deal and then sought unsuccessfully to take over a rival, Hercules. He died in November 2009.

International Specialty, based in Wayne, N.J., produces specialty chemicals and performance enhancing products for consumer and industrial markets. It had $1.6 billion in revenue for the year ended March 31, and $360 million in earnings before interest, depreciation, taxes and amortization. But it also has debt of $926 million, according to Capital IQ data.

The deal will help Ashland “significantly expand our market positions in higher margin, higher growth and less cyclical global markets like personal care and pharmaceuticals,” Ashland’s chief executive, James J. O’Brien, said in a statement. “It broadens Ashland’s presence within attractive growth areas like skin, hair and oral care, which are large and fast-growing segments of the $5-billion-plus personal care specialty ingredients market.”

Ashland, based in Covington, Ky., is also a maker of specialty chemicals, including Valvoline motor oil. The deal is the company’s largest since it bought Hercules for $3.3 billion in 2008.

The company is paying for International Specialty with its own cash and with financing from Citigroup, Bank of Nova Scotia, Bank of America Merrill Lynch and U.S. Bancorp.

Under the terms of the deal, if the financing is not available, Ashland would have to pay International Specialty a termination fee of $413 million. The deal is pending regulatory approval, and is expected to close this autumn.

Bank of America Merrill Lynch and the law firm Cravath, Swaine Moore advised Ashland.

Moelis Company and the law firm Sullivan Cromwell advised International Specialty.

Article source: http://dealbook.nytimes.com/2011/05/31/ashland-to-buy-chemical-company-for-3-2-billion/?partner=rss&emc=rss

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