Crompton Corporation And Great Lakes Chemical Corporation Announce Merger To Create Major New Specialty Chemicals Company
09 3월 2005 - 8:29PM
PR Newswire (US)
Crompton Corporation And Great Lakes Chemical Corporation Announce
Merger To Create Major New Specialty Chemicals Company -
Stock-for-Stock Transaction Valued at $1.8 Billion - MIDDLEBURY,
Conn. and INDIANAPOLIS, March 9 /PRNewswire-FirstCall/ -- Crompton
Corporation (NYSE:CK) and Great Lakes Chemical Corporation
(NYSE:GLK) announced today that they have entered into a definitive
merger agreement for an all-stock merger transaction, which will
create the third- largest publicly traded U.S. specialty chemicals
company. The new company will have combined pro forma 2004 revenues
of more than $4.1 billion and a market capitalization of nearly
$3.2 billion. It will hold leading positions in high-value
specialty chemical niche businesses including plastics additives,
petroleum additives, flame retardants and pool chemicals.
Additionally, the combined company will maintain strong positions
in castable urethanes and crop protection chemicals. Under terms of
the agreement, which has been unanimously supported by the boards
of directors of both companies, Great Lakes shareholders will
receive 2.2232 shares of Crompton common stock for each share of
Great Lakes common stock they hold. The transaction is expected to
be tax-free to Great Lakes' shareholders. The exchange ratio
represents a 10.1% premium over Great Lakes' closing share price on
March 8, 2005, and equates to $29.92 per Great Lakes share. Based
on the March 8th price, the transaction is valued at $1.8 billion,
including approximately $250 million of Great Lakes net debt and
minority interest. The new company will be owned 51 percent by
Crompton shareholders and 49 percent by Great Lakes shareholders on
a fully diluted basis. Robert L. Wood, currently chairman,
president and CEO of Crompton, will serve in those capacities for
the combined company, which will be headquartered in Middlebury,
Connecticut. In addition to Robert L. Wood, the board of directors
will have five directors from each side, for a total of eleven
directors. The new company expects to maintain Crompton's existing
cash dividend level of $.05 per quarter. "This combination
represents an excellent strategic fit between two companies with
complementary business portfolios and will create a company with a
strong financial profile," said Robert L. Wood, chairman, president
and CEO of Crompton. "It takes us a long way towards our goal of
holding leading global positions in true value-added specialty
chemicals businesses. In addition to significant operating
synergies, we immediately gain greater geographic reach in plastics
additives. Building on the increasing profitability of both
companies, we see an opportunity with these solid platforms to
accelerate our momentum in delivering higher earnings and stronger
cash flow. "Leveraging our recent experience at Crompton, we will
execute a well planned, disciplined and comprehensive integration
program and expect recurring annual cost savings of $90 million -
$100 million, to be achieved in most part by 2006. The combined
company will be well capitalized, and will have sufficient
liquidity to execute on its business plan," said Wood. "We believe
this merger provides immediate value creation for our shareholders
through the upfront premium and significant synergy opportunities
to be realized over the next 18 months," said John J. Gallagher,
III, acting CEO of Great Lakes. "Further, by combining with
Crompton, we create a leading global specialty chemicals company
with a portfolio of businesses capable of delivering long-term
shareholder value. This transaction will result in a company that
is stronger and better positioned. The combination creates options
and flexibility that operating as two separate companies would not
provide." The transaction is expected to be accretive to the
combined company's 2006 earnings per share and cash flow per share.
In addition to significant cost synergies, the combined company
expects to realize cash flow benefits related to utilization of
Crompton's net operating losses. One-time pre-tax closing costs are
expected to be approximately $35 million - $40 million. The
combined company also expects to incur one-time pre-tax integration
costs of approximately $90 million - $100 million. In addition to
Robert L. Wood as chairman and CEO, Karen Osar will serve as CFO,
Robert Weiner will head Supply Chain Operations, and Gregory
McDaniel, Crompton's senior vice president, Strategy and New
Business Development, will lead the integration activities. Myles
Odaniell will head the combined company's Specialty Chemicals
segment, Marcus Meadows-Smith will head Crop Protection and Great
Lakes' Kevin Dunn will head Consumer Products for the combined
company. Other management positions will be filled through the
integration process, utilizing personnel from both companies. The
transaction, which is expected to close by mid-year, is subject to
regulatory approvals, approval by shareholders of both companies
and other customary conditions. Morgan Stanley and Citigroup Global
Markets Inc. acted as financial advisors to Crompton on this
transaction and Merrill Lynch & Co. acted as financial advisor
to Great Lakes. In 2004, Crompton had total revenue of
approximately $2.55 billion and a net loss of $34.6 million. Great
Lakes had total revenue of $1.6 billion and net income of $62.9
million in the same period. At December 31, 2004, Crompton and
Great Lakes had 4,800 and 3,700 employees, respectively. Conference
Call Scheduled Today to Discuss Transaction The parties will hold a
joint conference call at 8:30 a.m. Eastern time on Wednesday, March
9. To access the call, dial (480) 629-9556. Live audio and
informational slides are available on Crompton's and Great Lakes'
investor relations pages at http://www.cromptoncorp.com/ and
http://www.greatlakes.com/. Replay of the conference call will be
available for two weeks beginning at 12:00 p.m., Wednesday, March
9, by calling (320) 365-3844, access code 773990. About Crompton
Crompton Corporation, with annual sales of $2.55 billion, is a
producer and marketer of specialty chemicals and polymer products
and equipment. Additional information concerning Crompton
Corporation is available at http://www.cromptoncorp.com/ . About
Great Lakes Great Lakes Chemical Corporation is the world's leading
producer of certain specialty chemicals for such applications as
water treatment, household cleaners, flame retardants, polymer
stabilizers, fire suppressants, and performance products. The stock
of the company is traded on the New York Stock Exchange. NOTE TO
INVESTORS CROMPTON and GREAT LAKES will file a proxy
statement/prospectus and other documents regarding the proposed
merger described in this communication with the Securities and
Exchange Commission. Investors and security holders are urged to
read the proxy statement/prospectus when it becomes available,
because it will contain important information about CROMPTON and
GREAT LAKES and the proposed transaction. A definitive proxy
statement/prospectus will be sent to security holders of CROMPTON
and GREAT LAKES seeking their approval of the transaction.
Investors and security holders may obtain a free copy of the
definitive proxy statement/prospectus (when available) and other
documents filed by CROMPTON and GREAT LAKES with the SEC at the
SEC's web site at http://www.sec.gov/. The definitive proxy
statement/prospectus and other relevant documents may also be
obtained free of cost by directing a request to CROMPTON, 199
Benson Road, Middlebury, CT 06749, attention Investor Relations,
Telephone: (203) 573-2163 or GREAT LAKES, 9025 North River Road,
Suite 400, Indianapolis, IN 46240, attention Investor Relations,
Telephone: (317) 715-3027. CROMPTON and GREAT LAKES and their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the shareholders
of CROMPTON and GREAT LAKES in connection with the merger.
Information about CROMPTON and GREAT LAKES and their respective
directors and officers can be found in CROMPTON's and GREAT LAKES's
respective Proxy Statements and Annual Reports on Form 10-K filed
with the SEC. Additional information regarding the interests of
those persons may be obtained by reading the proxy
statement/prospectus when it becomes available. Forward-Looking
Statements Crompton and Great Lakes caution readers that any
forward-looking information is not a guarantee of future
performance and that actual results could differ materially from
those contained in the forward-looking information. Such
forward-looking information includes, but is not limited to,
statements about the benefits of the business combination of
Crompton and Great Lakes, including future financial and operating
results, the combined companies' plans, objectives, expectations
and intentions and other statements that are not historical facts.
The following factors, among others, could cause actual results to
differ from those included in the forward-looking information: the
risk that the businesses will not be integrated successfully; the
risk that the cost savings and other synergies from the transaction
may not be fully realized or take longer to realize than
anticipated; the inability to achieve cash flow synergies;
disruption from the transaction that makes it more difficult to
maintain relationships with employees, customers or suppliers;
competition and its effect on pricing, spending, third-party
relationships and revenues; the ability to obtain regulatory
approval of the transaction on the proposed terms and schedule; and
the failure of the stockholders of either Crompton or Great Lakes
to approve the transaction. DATASOURCE: Great Lakes Chemical
Corporation CONTACT: Investors: William Kuser, +1-203-573-2213,
Media: Mary Ann Dunnell, +1-203-573-3034, both of Crompton;
Investors: Paul Britton, +1-317-715-3027, Media: Wendy Chance,
+1-317-715-3027, both of Great Lakes Chemical Corporation Web site:
http://www.greatlakes.com/ http://www.cromptoncorp.com/
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