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Major
Chemical Companies Take Lead in Nanotechnology
According to Consulting Resources Corporation
(CRC), Dow Chemical and DuPont lead the
chemical industry in nanotechnology
initiatives. The rating is based on research
and development investments and dollar sales
of nanotechnology products. General Electric
and Honeywell are classified as second-tier
companies with "respectable nanotech
activity," while Air Products, Cabot,
Engelhard and ExxonMobil Chemicals have
"adequate nanotech activity." Dow
Corning, Hercules, Eastman Chemical, Praxair,
FMC and PPG have "relatively little
nanotech activity," and Ciba Specialty
Chemicals, Rohm & Haas, Crompton,
Lubrizol, Huntsman and Solutia have shown
"little or no obvious interest in
nanotech opportunities," according to the
report.
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Clariant sold its Lancaster Synthesis catalogue and
small-scale bulk manufacturing operations to Johnson
Matthey for $26 million (Euro 21 million, SF32
million). The sale is part of Clariant's strategy to
divest non-core activities and improve group
profitability. The company already sold its cellulose
ethers business to Shin-Etsu Chemical for $279 million
(Euro 225 million).
As part of a reorganization of its car
refinishes business, Akzo Nobel will cut
approximately 600 jobs, or 10 percent of that
unit's workforce over the next two years. The
restructuring is needed to improve
profitability and realign the business with
changing market conditions, according to the
company, which has been experiencing reduced
margins and lower sales. Positions will be
affected in all regions of the world, but
Western Europe and North America will feel the
greatest impact.
Bayer's independent chemicals business Lanxess
will be spun off to shareholders and listed
separately on the stock exchange beginning in
January of 2005. The company chose not to
launch Lanxess through an initial public
offering (IPO) because market conditions are
not favorable. An extraordinary stockholders'
meeting will be held in mid-November to allow
stockholders to approve the move. Lanxess has
been operating independently of Bayer since
July 1. Analysts estimate the business to have
a market value of at least $1.24 billion (Euro
1 billion).
Bayer reported that it has settled out of
court 2771 cases worth $1.059 billion (Euro
855 million) regarding its recalled
anti-cholesterol drug Baycol. An additional
8048 cases remain pending. Baycol was recalled
in August 2001 after being linked to 100
deaths resulting from the severe muscle
weakness condition called rhabdomyolysis.
Outside of the U.S., Baycol was marketed under
the name Lipobay.
If the European Union's (EU) proposed
registration, evaluation and authorization of
chemicals (REACH) system is adopted as it
stands today, Rhodia may be forced to stop
production of about 1000 products, according
to chief executive Jean-Pierre Clamadieu. All
of Rhodia's 7000 products would need to be
evaluated, and for many, the required testing
would be cost prohibitive.
Roche plans to build a new biotech center at
its Basel, Switzerland site and add a biotech
unit at its Penzberg, Germany location in
response to the need for more capacity for its
existing and pipeline biotech drugs. The
investment will total approximately $640
million (SFr 800 million). Work in Basel is
expected to begin in August of 2004. The new
biotech center will replace Roche's existing
production facility and will be a
manufacturing site for Avastin (Bevacizumab).
The new 5-story addition at the Penzberg site
will be for production of Herceptin (Trastuzumab).
Construction is also slated to begin in
August.
Michael Dolan will succeed the retiring Daniel
Sanders as president of ExxonMobil, effective
September 1st. Sanders served the company for
43 years, beginning as a mechanical engineer.
Dolan, who is currently deputy to the
president of ExxonMobil Refining & Supply
Company, began working in a research lab for
Mobil in 1980. He will be replaced with
Stephen Pryor, who is currently executive vice
president at ExxonMobil Chemical.
Vice chairman Jacek Walczykowski has been
appointed to replace the retiring Zbigniew
Wrobel as Chairman of Polish oil refining and
petrochemicals group PKN Orlen. Wrobel is
leaving the company "due to the recent
media speculation and political controversy
surrounding PKN Orlen and its management
board". Orlen is currently under
investigation by a parliamentary commission
for alleged irregularities in the dismissal of
Wrobel's predecessor Andrzej Modrzejewski.
Texas Petrochemical (TPC) terminated president
and chief executive Carl Stutts, chief
financial officer Joseph Grady and senior vice
president and legal counsel Stephen Wright.
The company supplied no reasons for the
terminations. Charles Shaver has been elected
as president and chief executive. Frederick
Pevow, interim senior vice president, is
succeeding Grady as chief financial officer
(CFO).
Apollo Management agreed to purchase Borden
Chemical, a manufacturer of high performance
resins, adhesives and specialty chemicals, for
$1.2 billion (Euro 970 million). The deal is
subject to regulatory approvals and is
expected to close in the third quarter of
2004. Borden expects to retain its current
management team and continue with the
company's current strategy.
Ciba acquired Canadian pulp and paper
chemicals supplier LPM Technologies for an
undisclosed amount. The company has annual
sales of approximately $12.2 million (Euro 9.9
million) and offers coagulants,
polyacrylamides, Polyethylene oxide (PEO) and
stabilized phenolic resins, dry and wet
strength resins, felt and wire cleaners and
conditioners, defoamers and scale inhibitors.
The purchase enables Ciba to establish a
greater presence in the Canadian market and
further build its paper chemicals business,
which became a significant part of the
company's operations with its recent
acquisition of Raisio Chemicals.
Following the sale of Lancaster Synthesis to
Johnson Matthey, Clariant announced the
divestiture of its AZ Electronic Materials
business to the equity firm The Carlyle Group
for $423 million (Euro 340 million, SF518
million). With the sale, Clariant will be able
to focus its life sciences and electronic
materials division more on custom synthesis
for the life sciences industries. The company
intends to sell two other yet to be identified
businesses and close some manufacturing
facilities as well.
Elementis completed its $58.3 million (Euro
48.5 million) purchase of Sasol Servo, the
specialty chemicals business of Sasol. With
the purchase, Elementis gains Sasol Servo's
coating additives, chemicals and specialty
surfactants (including oilfield chemicals),
and paper and pulp chemicals activities.
An Investor group led by ACI Capital and Lion
Chemical Capital agreed to purchase the
elastomers and performance additives business
of PolyOne for $120 million (Euro 99 million).
The deal is expected to be finalized in the
third quarter of 2004. PolyOne sold the
business, which services the transportation,
electrical, industrial and printing
industries, to improve profitability. The
business has annual sales of approximately
$350 million. PolyOne is also divesting its
engineered films and specialty resins
businesses for the same reason.
Kemira agreed to sell its fine chemicals
business for approximately $85 million (Euro
70 million) to UK venture capital group 3i.
This sale, and the sale of its engineering
activities to PIC Engineering, will enable
Kemira to focus on its core activities,
including pulp and paper chemicals, water
treatment chemicals, industrial chemicals, and
paints and coatings. The fine chemicals
business provides custom synthesis services
for the agriculture and pharmaceutical
industries.
Rockwood Specialties agreed to purchase the
pigments and dispersions business of Johnson
Matthey for $50.6 million (GBP 27.0 million,
Euro 40.6 million). Rockwood is a division of
the U.S. private investment firm Kohlberg
Kravis Roberts (KKR) and recently acquired
Dynamit Nobel from MG Technologies for $2.7
billion. The sale of this business, which is
part of its colors and coatings division, will
allow Johnson Matthey to focus on its
catalysts, precious metals and pharmaceutical
materials businesses.
King Pharmaceuticals will be acquired by Mylan
Laboratories for $4 billion (Euro 3.3
billion). With the purchase Mylan will become
the largest diversified specialty
pharmaceutical company in the U.S. King, which
has been under investigation by the Securities
and Exchange Commission (SEC) regarding
pricing practices for government programs such
as Medicaid, is a vertically integrated
branded pharmaceutical company.
Roche has agreed to sell its over-the-counter
(OTC) drugs business to Bayer for $2.96
billion (Euro 2.38 billion). With the
acquisition, Bayer will become one of the top
three OTC drug businesses in the world. The
deal is subject to regulatory approval and is
expected to close by the end of 2004. Bayer's
new consumer healthcare business will have
annual sales of approximately $2.98 billion
(Euro 2.4 billion). The sale of the OTC drug
business will allow Roche to concentrate on
prescription medicines and diagnostic
products.
Sandoz, a subsidiary of Novartis, has agreed
to acquire Canadian injectable generics
manufacturer Sabex Holdings for $565 million
in cash. The purchase will provide Sandoz with
its first Canadian generic production
facility. Sabex had revenues totaling $90
million in 2003.
Sanofi-Synthelabo reported that the U.S.
Federal Trade Commission (FTC) approved its
planned $64 billion (Euro 53.3 billion)
takeover of Aventis as long as some
divestitures are completed. The FTC consent
agreement and implementing order is subject to
public comment for 30 days. The European
Commission gave conditional clearance for the
deal in April. Sanofi-Synthelabo will sell
operations relating to the anti-coagulants
Fraxiparine and Arixtra, the cytotoxic
colorectal cancer treatment Campto, which it
previously licensed to Aventis, and its
Delagrange vitamin B12 business in France. It
must also divest Aventis' contractual rights
to the insomnia drug Estorra.
Investment banker Rothschild has been hired by
Solutia to find potential buyers for its
European pharmaceutical services business,
which accounts for about 2% of the company's
sales. Solutia filed for bankruptcy in
December of 2003 and has since received two
extensions for filing a plan for emerging from
bankruptcy.
After a lengthy inspection, the U.S. FDA
approved Boehringer Ingelheim's new
biopharmaceutical active ingredients plant in
Biberach, Germany where it produces the
rheumatoid arthritis drug Enbrel for Amgen and
Wyeth. With the approval, Boehringer Ingelheim
will also be able to provide custom biopharma
manufacturing services for other customers
selling to the U.S. market. The Biberach
facility was inaugurated in September, 2003.
Citing unfavorable business conditions,
Syngenta announced that it will close its
plant biotech R&D activities at Jealott's
Hill, U.K. and move them to Research Triangle
Park, NC in the U.S. The U.K. site will be
used for fungicide and herbicide R&D.
Separately, Syngenta agreed to pay $180
million to acquire a 90 percent stake in U.S.
seed company Golden Harvest, which has seed
sales of about $167 million/year and holds a
4% U.S. market share in corn and a 3% share in
soybeans. With the acquisition, Syngenta will
have a 15 percent share of the U.S. corn
market and a 13 percent share of the soybean
market.
As part of its plans to gain antitrust
approval for its $3.27 billion (Euro 2.68
billion) takeover of Messer, Air Liquide is
selling six former Messer air separation
plants in the U.S. to Nippon Sanso subsidiary
Matheson Tri-Gas for $155 million. The six
units have annual sales of approximately $60
million. With the purchase, Matheson extends
its network in the Southern U.S. and gains an
air gases presence in California. The deal
must be approved by the FTC, which required
that the purchaser of the Messer assets be
large enough to maintain competition in the
market.
Romanian state-owned oil and chemical group
Petrom agreed to sell a 51 percent stake in
the company to Australian oil group OMV for
$1.73-$1.90 billion (Euro 1.39-1.52 billion).
The sale was one of the conditions set by the
European Union (EU) for awarding Romania
"functioning market economy'' status. The
Romanian government approved the terms earlier
in July. Gheorghe Constantinescu will continue
as chief executive of Petrom. With the
acquisition, OMV is much closer to attaining
its goal of having a 20 percent share of the
market in Eastern Europe. Petrom has estimated
oil and gas reserves of about 1 billion
barrels of oil equivalent (boe), a daily
production of 220,000 boe, a refining capacity
of 8 million tonne/year and 600 filling
stations. The company also owns two
petrochemical plants.
ExxonMobil has signed an agreement to design,
construct and perform all operations in
connection with a $7 billion (Euro 5.6
billion) gas-to-liquids (GTL) project with the
Qatar government. In addition, the company
will be granted the right to develop and
produce gas and associated liquids to supply
the plant. The 154,000 bbls/day facility will
be built at the Ras Laffan Industrial City in
Qatar and will convert natural gas to
sulfur-free diesel (50 percent), lube base
stocks (20 percent), Naphtha, paraffins and
Ethane using proprietary technology. The heads
of agreement (HOA) signed by ExxonMobil and
the government outlines the major terms of the
project. The company will sign a development
and production sharing agreement (DPSA)
specifying the details at an undetermined time
in the future.
LG International of South Korea expects to
finalize a $2.6 billion (Euro 2.13 billion)
deal in September to build a joint-venture
cracker and petrochemical complex in
Nizhnekamsk, the Russian Republic of Tatarstan.
The joint venture group will be called
Tatar-Korean Petrochemical Co (TKNK). LGI
holds a 9.9 percent stake in TKNK,
Nizhnekamskneftekhim Inc. 36.37 percent,
Tatneft JSC 45.45 percent and
Svyazinvestneftekhim 9.9 percent. The complex
will include a 600,000 tonne/year cracker and
some polymer units.
Russian oil major Lukoil, through its
petrochemical subsidiary Lukoil-Neftekhim,
will acquire an 87.42 percent stake in
Stavropolpolymerproduct at Budyennovsk,
Stavropol, Southern Russia. Lukoil will pay
$32 million to the state, which acquired a
controlling interest in the unfinished
Polypropylene facility in 1997. Lukoil will
invest up to $150 million and expects to
complete construction in the next 18 months.
The company plans to create a petrochemicals
complex with the Stavropolpolymerproduct
facility and the previously acquired Stavrolen
Polyethylene plant.
The $2.3 billion merger of Millennium
Chemicals and Lyondell Chemical has been
delayed until the fourth quarter of 2004.
Millennium needs to reissue financial
statements in order to correct a $15 million
(Euro 12.5 million) accounting error from the
period 1997-1999. According to Millennium, the
restatement will correct errors made in
determining the company's tax basis in
Equistar, its joint venture with Lyondell. The
error resulted in Millennium overstating its
liability for deferred income taxes.
