By David Shaw, UT contributing editorMiddlebury, Connecticut-Polymer and speciality chemicals producer Crompton Corp. is merging with Indianapolis-based Great Lakes Chemical Corp. in a stock-swap transaction valued at $1800 million, including about $250 million of Great Lakes debt and minority interest.The deal creates a group with major strengths in supplying the polyurethanes sector, via flame retardants for flexible and rigid polyurethanes from Great Lakes and castable polyurethanes from Crompton. The new company, to be 51-percent owned by Crompton shareholders, will have combined 2004 revenues of more than $4100 million and a market capitalisation of nearly $3200 million, the companies said. It will hold "leading positions in speciality chemical niche businesses such as plastics additives, petroleum additives, flame retardants and pool chemicals along with strong positions in castable urethanes and crop protection chemicals," the companies said in a joint statement.Crompton anticipates the merger will create operating synergies that could result in annual cost savings of up to $100 million, according to Robert Wood, chairman, president and CEO of Crompton, who will serve in those capacities for the combined company.To effect the merger, Great Lakes shareholders will receive 2.2232 shares of Crompton common stock for each share of Great Lakes common stock they hold, a rate that represents a 10.1-percent premium over Great Lakes' closing share price on 8 March. The boards of directors of both companies have unanimously supported the agreement. Crompton's urethanes group has four units: Adiprene and Vibrathane brand hot-cast urethane prepolymers; Fomrez polyester polyols; Witcobond PU dispersions; and Witcothane microcellular PU-based shoe sole systems. The Adiprene/Vibrathane business represents about 60 percent of Crompton's overall urethanes group sales.Great Lakes is a major supplier of flame retardants for the flexible and rigid polyurethane foam sectors, among others. The firm also supplies polymer stabilisers and antioxidants used widely in rubber and polyurethane formulations. Among the other speciality chemicals made by Great Lakes are water purifiers and domestic cleaning agents."
