January 2004 Pentagon Acquires Fine Chemicals Capability UK based Pentagon Chemicals has announced the acquisition of Great Lakes Chemical Corporation's fine chemical business based at Halebank, Widnes, UK. Pentagon's contract manufacturing business currently draws primarily on its reaction capability and raw material handling strengths in Benzyl chloride, Maleic anhydride and Grignard chemistry. Great Lakes at Halebank is a leading manufacturer of pharmaceutical intermediates, agrochemicals and industrial specialties. Alistair Lloyd, Pentagon's Sales & Marketing Director, says "This opportunity secures all of the strategic needs of our business, including a blue chip customer base in the fine chemicals marketplace." Pentagon intends to develop new long terms relationships with existing Great Lakes customers and to grow through new business development. Commercial and operations management will be highly integrated and world-class manufacturing inititiatives will be pursued. The group will continue to be administered by the present Pentagon Board.   Famous Quotes of the Month - Possibilities do not add up. They multiply. (Paul M. Romer) - An optimist stays up until midnight to see the new year in. A pessimist stays up to make sure the old year leaves. (Bill Vaughn) - The limits of my language mean the limits of my world. (Ludwig Wittgenstein) - The grass may look greener on the other side of the fence, but it's just as hard to cut. (Little Richard) - Procrastinate: Something you do when you don't. (Joe Heuer) What is the Official Name of the Moon? What is the official name of the Earth's only natural satellite? Is it Moon? The Moon? the moon? Moon? moon? Other planets have moons. Do they all have names? How do we distinguish one moon from another? As it turns out, the proper name of the earth's natural satellite is "the Moon" and therefore should be capitalized. The 60(approximately) natural satellites of the other planets are referred to as "moons", in lower case, since they all have been given a proper name. Jupiter, for example, has 16 moons (Jovian moons) and these are further divided into categories. The most popular Jovian moons are the four Galilean moons called Io, Europa, Callisto and Ganymede. The Moon's Latin name, Luna, has been used in poetry and science fiction but has never caught on among scientists or the lay public. Essentially, names are used to distinguish one thing from another. Since the Earth has only one moon, there is nothing to distinguish it from and so it's official name remains "the Moon". GE Focuses on Cash Generation and Growth GE reorganized the company into two types of groups in order to grow the company and generate cash. GE Advanced Materials, formed from the plastics, silicones and quartz businesses will be a $9 billion per year cash generation unit headed up by John Krenicki, currently CEO of GE Plastics. Other cash generators include the consumer business, equipment services and insurance. The water treatment business will be merged with the $4 billion GE Infrastructure unit, which also includes GE Fanuc Automation and GE's security and sensors businesses. Considered a growth engine for the company, GE Infrastructure will be headed by William Woodburn, currently CEO of GE Specialty Materials. Other growth platforms include the commercial finance, consumer finance, energy, healthcare, NBC-Universal and transportation businesses. General Chemical Files for Chapter 11 General Chemical Industrial Products has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey. The holding company, which owns soda ash producer General Chemical Partners and calcium chloride producer General Chemical Canada, has not been in compliance with certain financial covenants and owes $109.7 million in subordinated notes, and $55.4 million under its senior credit agreement. General Chemical is in discussions with creditors regarding a plan to address its debt, but the plan has not yet been approved by the bankruptcy court. Revenue losses are attributed to lower soda ash prices and higher energy costs by the company. Overcapacity and weak demand have also squeezed margins. Solutia Declines to Pay Liabilities from Monsanto Chemical; Files for Bankruptcy Solutia refused to pay a $3 million share of two asbestos lawsuit settlements in which the company was not named as a defendant and not party to the settlement. The company has contractual obligations to pay liabilities of the old Monsanto Chemical business no matter who is named in a law suit, and Monsanto says Solutia must pay. If the company doesn't honor its obligations, Monsanto will be responsible for the share of the settlement. Solutia says it will challenge other "legacy" liabilities resulting from its spin-off from Monsanto in 1997. The company also filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York due in part to the legacy liabilities from Monsanto, particularly liabilities related to PCB litigation. Solutia has additional legacy liabilities including other environmental cleanup costs, product liability obligations and pension liabilities for 20,000 former Monsanto employees. According to president and CEO John C. Hunter, Solutia has spent about $100 million annually to service these legacy liabilities, which has placed the company in an uncompetitive position. He expects the Chapter 11 process will enable Solutia to free itself of these huge debts and place itself on a more equal footing with its competition. Dow Agrosciences Appoints New CEO Jerome Peribere, currently vice president of agricultural chemicals, has been appointed chairman and CEO of Dow AgroSciences effective February 1, 2004. Pewribere replaces the retiring Charles Fisher, who will become chairman of the Dow Agro-Sciences members committee that oversees policy and investment. Grace Gets New President W.R. Grace has elected Fred Festa, a partner in management buyout firm Morgenthaler Private Equity (Cleveland), as president and COO effective immediately. Festa will "focus solely on improving the financial performance of Grace's core businesses, and provide an additional internal candidate for succession planning." Paul Norris will remain chairman and CEO until the company emerges from bankruptcy in February, 2004. Hercules Appoints New President Acting president and COO Craig A. Rogerson has been appointed the new president and CEO of Hercules, replacing former chairman and CEO William Joyce, who left the company to become the head of Nalco. Rogerson previously headed up Hercules' FiberVisions and Pinova divisions. Kemira Names New CEO Lasse Kurkilahti, currently president and CEO of electronics manufacturing services company Elcoteq (Espoo, Finland), has been appointed CEO of Kemira effective June 2004. Kurkilahti succeeds the retiring Tauno Pihlava. Strong Euro Affects European Chemical Industry The value of the Euro has risen by approximately 20 percent in 2003 and is expected to facing increasing upward pressure for some time to come. Margins for chemicals have decreased as European chemical companies have been forced to reduce prices. The value of the Euro could rise to as high as $1.40 according to some investment banks. The situation is difficult for the European chemical industry because it relies heavily on exports. Companies are responding with further cost reduction efforts, but only so much can be done using this type of measure. Avecia's Additives Business to be Acquired by Lubrizol Avecia's $50 million/year additives business will be acquired by Lubrizol for an undisclosed sum. Lubrizol will combine the unit with its $100 million/year paints, coatings, and inks division. The purchase will enable Lubrizol to more fully meet the needs of its paint, inks and coatings customers. The deal is expected to close in early 2004 once regulatory approval has been received. Blackstone Bids for Celanese Blackstone Capital Partners, a private equity firm, offered $1.99 billion (Euro 1.6 billion) to acquire Celanese. The deal includes an 11 percent premium for the stock price (Euro 32.50 per share). Blackstone will also assume Celanese' Euro 446 million of debt and Euro 1.04 billion in pension obligations. Both Celanese management and Kuwait Petroleum, the company's largest shareholder, approved the deal. Blackstone will use Celanese as a building block for future chemical company acquisitions and provide the necessary resources to enable Celanese to expand its businesses. Company management is expected to remain unchanged. Cytec Purchases Mining Chemicals Business Cytec acquired the metal extractant products (MEP) and intermediate and stabilizers (I&S) businesses from Avecia for $97 million in cash. The purchase provides Cytec with entrance into the MEP business and adds aromatic phosphines and acrylic stabilizers to Cytec's product line. Henkel Makes $2.9 billion Offer for Dial Henkel offered to purchase Dial for $2.9 billion in cash and will use "all available funds and debt" plus sell "a significant portion" of its minority investments in Clorox and Ecolab to finance the deal. Dial management is recommending the price of $28.75 per share (an 11.1 percent premium) be accepted by its shareholders. According to Henkel, the acquisition will offer growth opportunities in North America where it has little market share. Analysts, however, believe that Dial is at the end of its growth cycle and will contribute little to Henkel. Plus, it will take Henkel at least ten years to recover its cost of capital. Johnson Matthey Puts Most of Color Division on the Block The color and coatings division of Johnson Matthey, not including the decorative precious metals and glass coatings businesses, will be put up for sale. The division, which largely supplies colorants and coatings to ceramic tile manufacturers, is expected to yield about 180 million pound sterling. Johnson Matthey is divesting the business because it has very little overlap with other company operations. In addition, demand from European tile manufacturers has been very weak recently. Pharma Fine Chemicals to Grow Rapidly in Asia Over the next three years, China and India will increase their share of the pharma fine chemicals outsourcing market to 25 percent from the current 10 percent value, says Enrico Polastro of Arthur D Little. This growth is largely driven by pharma firms looking to lower their costs. Concerns over intellectual property and quality issues will be a much smaller factor as potential cost savings loom large. FDA Approves Lilly's Cialis The FDA approved Eli Lilly and Company's anti-impotence drug Cialis (Tadalafil) for the treatment of erectile dysfunction (ED) in men. Cialis, which was launched in early December, is the third drug for ED in the U.S. market, along with Pfizer's Viagra and Bayer/GlaxoSmithKline's Levitra. Cialis is already available in 50 countries and earned $109 million in global sales in the first nine months of 2003. Pfizer Animal Health to Acquire CSL Animal Health Australia-based biopharmaceutical firm CSL Ltd. will sell its CSL Animal Health division to Pfizer Animal Health for $126.2 million in cash. With the purchase, Pfizer will significantly improve its position in the Australian animal health market. CSL Animal Health had annual sales of $46 million in 2002 and offers a line of livestock and companion animal vaccines. Pfizer plans to expand CSL's line of immunosterilization vaccines into global markets. Ranbaxy to Acquire Generics Business Ranbaxy Laboratories (Delhi) announced that it will purchase the generic drug manufacturing business of Aventis. Analysts predict that the acquisition, valued at $60 million to $70 million, could raise Ranbaxy's European generics sales to nearly $100 million Dow Chemical in Biotech Collaboration Dow Plant Biopharmaceuticals, a subsidiary of Dow Chemical, has agreed to collaborate with biotechnology firm Greenovation (Freiburg, Germany) to develop a commercial process to make monoclonal antibody drugs from plants. Dow will supply its systems for engineering antibodies from plants, and Greenovation will use them in its production system that utilizes genetically engineered protonema moss. Financial details and information on the types of drugs to be developed have not been disclosed. Eli Lilly Acquires Applied Molecular Evolution Inc. Eli Lilly and Company plans to acquire biotech partner Applied Molecular Evolution Inc. (AME) for approximately $400 million. The two companies have collaborated on the development of several biotherapeutic compounds over the past two years. The deal is expected to close in the first quarter of 2004. AME optimizes the performance of antibodies, cytokines, hormones and enzymes by engineering proteins using directed evolution techniques. Lilly also gains AME's pipeline of drug candidates including an anti-TNF antibody for the treatment of rheumatoid arthritis that is currently in preclinical trials. Camisea Under New Ownership Camisea, the $1.48 billion natural gas project in Peru, has been purchased by a consortium including Pluspetrol, Hunt Oil, SK Corporation, Techint and Sonatrach. E-Commerce Exchange Omnexus Closes Omnexus, the online engineering plastics exchange providing technology and services for buyers and sellers of plastic resins, closed due to poor acceptance of its e-commerce business model. Users have been directed to Elemica. The e-marketing services portion of Omnexus, which includes promotional services and Web seminars, is expected to be sold by the end of 2003. Omnexus was formed in 2000 by BASF, Bayer, Dow Chemical, DuPont, and Celanese, with later investments made by Atofina, Clariant, DSM, PolyOne, Solvay and several plastics processors. Market for Polymers Growing in India Domestic demand for polymers in India has resulted in a dramatic rise in polymer sales and an increase in some imports as well. Polyvinylchloride (PVC), Polyethylene (PE), linear low-density PE (lldPE) and high-density PE (hdPE) have all experienced growth. Volume demand for PVC was up 28 percent in the first seven months of the fiscal year as compared to