Aventis
Retains Rhodia Shares; Sanofi Proceeds with Hostile
Takeover Attempt
Aventis will not be required to reduce its 15.3
percent stake in Rhodia down to less than 5 percent
because the sale of these shares could destabilize
Rhodia's restructuring efforts. The sale was
originally a requirement of the 1998 merger between
Hoecsht and Rhone-Polenc to create Aventis. The latest
agreement approved by the European Commission does
require Aventis to sell its 49 percent stake in
Wacker-Chemie within several years.
Separately, in defense of Sanofi-Synthelabo's hostile
$6.1 billion (Euro 4.8 billion) take-over bid, Aventis
announced plans to buy back $2.5 billion to $3.7
billion (Euro 2-3 billion) of its own shares. Aventis
will also spin off its pharma products business into
an independent company valued at Euro 1.5 billion,
retaining a 49 percent stake in the new orgnaization.
The Blackstone Group and other private equity firms
are considering the purchase of the remainder of the
new company.
Total and L'Oreal, the two companies that together
have a controlling stake in Sanofi, have given their
support to the hostile takeover bid for Aventis. Both
companies signed a memorandum to relinquish their
rights under a former agreement to block or amend the
Sanofi bid for Aventis because of the likely dilution
in their holdings. Sanofi has received approval from
the French stock market authority AMF for the
takeover.
Aventis' supervisory board unanimously rejected the
takeover bid as "clearly inadequate" when it
was formally launched by Sanofi. The board also
indicated that the offer had other social risks
associated with it and recommended that shareholders
reject it. Aventis has lodged two appeals against the
approval of the takeover bid by French stock market
regulator Autorite des Marches Financiers (AMF),
claiming that Sanofi's supplementary note contains
insufficient data, particularly in reference to
Sanofi's heart drug Plavix. The AMF agreed to delay
the closing of Sanofi's offer, which was expected to
be set by Paris Court of Appeals judge Christine
Penichon on March 1st.
Famous
Quotes of the Month
- Failure seldom stops you; what stops you is
the fear of failure. (Jack Lemmon)
- Every great mistake has a halfway moment, a
split second when it can be recalled and
remedied. (Pearl S. Buck)
- What you can do is often simply a matter of
what you will do. (Norton Juster)
- It's not what you are, it's what you don't
become that hurts. (Oscar Levant)
- Never regret. If it's good, it's wonderful.
If it's bad, it's experience. (Victoria Holt)
How
Did They Keep Beer Cold in the Saloons of the
Old West?
Even though beer drinkers of the 19th century
didn't drink beer as cold as they do now, they
still preferred their brew cool (we should
note that in some countries such as England
and China, they often imbibe on pints of warm
ale). In colder areas of the American West,
saloons used to gather ice from frozen lakes
in the winter. The beer harvest was stored in
ice houses where the blocks of ice were
insulated with sawdust. This method would keep
the ice for months. Where it wasn't cold
enough for ice to form, many saloons still had
access to cool mountain streams. Saloon
workers would fill a cistern with this stream
water to store and cool barrels of beer. If no
cold mountain stream was available, saloons
built a root cellar to house beer. These were
usually built into the side of a hill and
could keep beer below 50 degrees Fahrenheit
(10 degrees Celsius).
Asbestos
Claims Largely Settled by Eastman
With an agreement to resolve more than 90
percent of asbestos claims originating in
Mississippi, Eastman Chemical has settled over
80 percent of its outstanding asbestos claims.
Over 11,000 claims had been filed against the
company. Eastman says the latest settlement
will not impact the company financially.
BASF
to Buy Back Stock
BASF will buy back up to $640 million (Euro
500 million) worth of its stock in 2004 in
order to reduce its equity ratio and increase
earnings per share. The company also
repurchased Euro 500 million worth of its
shares in 2002 and 2003. In 2001, the stock
buy back totaled Euro 1.3 billion.
Celanese
Gets New Chairman; Management Supports
Blackstone Bid
Vice chairman and COO David Weidman will
become chairman of Celanese effective November
1, following the retirement of Cluadio Sonder.
CFO Perry Premdas will also leave as of
October 31, and a replacement for him is being
sought.
The management of Celanese has also announced
its formal support for the $3.94 billion (Euro
3.10 billion) friendly takeover offer made by
the Blackstone Group. The offer of Euro 32.50
per share is a 13 percent premium over the
three-month weighted average share price
before the offer was made. At least 85 percent
of outstanding shares must accept the bid by
March 15th. As the largest shareholder with
26.28 percent, Kuwait Petroleum has already
agreed to the offer. Celanese's works council,
which represents employees, pensioners and
senior management that own about 6 percent of
the stock, also supports the deal.
Ciba
Will Concentrate Capacity Expansions in Asia
Ciba Specialty Chemicals does not plan to
build any new plants in Europe or the U.S.
Rather it will make all new facility
investments in Asia, with China being the most
likely location. In the U.S. and Europe,
efforts will be targeted at modernizing and
improving the productivity and efficiency of
existing plants. Of the $190 million (Euro 160
million, CHF 250 million) budgeted for annual
capital expenditures over the next three
years, Ciba will spend about 60 percent on
maintaining or improving environmental health
and safety, increasing output at existing
facilities, and further automation. The other
40 percent is targeted for new product lines
in its home and personal care, plastic
additives and coating effects businesses.
Clariant
Announces Further Job Cuts
In order to improve the efficiency of its
organizational structure and business
processes, Clariant will cut an additional
4000 jobs, or about 15 percent of its
workforce, over the next two years. Most jobs
will be in general administration,
infrastructure, production and the supply
chain. Various functions previously
distributed throughout the world will be
concentrated at Clariant's Muttenz,
Switzerland headquarters. Clariant already
sold its cellulose ethers business at the end
of 2003 and is in negotiations for the sale of
its electronic materials business.
DSM
to Make Further Job Cuts
Following a recent announcement to reduce the
workforce in its nutritional products unit by
420 jobs, DSM said it will cut another 500
positions, or nearly 21 percent, in the
support services and manufacturing staff
departments at its facility in Chemelot,
Netherlands. The company will begin
implementing the cuts in the second quarter of
this year and will complete them over a two
year period. A charge of Euro 33 million will
be taken in DSM's fourth quarter results to
cover the costs of the cuts, and the company
expects to gain annual savings of at least $64
million (Euro 50 million). The reductions are
part of a reorganization designed to address
the diverse and fragmented nature of the
support services and manufacturing staff at
the facility.
Total
Reorganizes Chemicals Business
Total's chlorochemicals, intermediates and
performance products will be spun off as an
independent company. The 2003 sales for these
three activities totaled $6.4 billion (Euro 5
billion). The petrochemicals and specialties
businesses will remain wholly owned by Total.
The demerger will take place once the unit is
"financially strong enough,"
according to a company spokesperson. In
addition, 132 jobs will be cut. Total's
chemicals businesses experienced a 28 percent
drop in operating profits and an 11 percent
decrease in sales.
VWR
International Acquired by Private Equity Firm
Merck KGaA sold VWR International, its U.S.
laboratory distribution business, to private
equity firm Clayton, Dubilier & Rice. The
deal, valued at $1.68 billion (Euro 1.31
billion), is subject to regulatory approval.
Effective April 1, Merck will form a new life
science & analytics division comprised of
its current analytics & reagents and life
science products divisions. VWR will continue
to distribute Merck's products. The sale will
allow Merck to focus on its core businesses
and significantly reduce its debt.
Akzo
Gets New Chemicals Head
Leif Darner, currently general manager of Akzo
Nobel's marine and protective business, has
been appointed as a board member for
chemicals, effective July 1. Darner replaces
the retiring Dag Stroemqvist, who has been a
board member since 2000.
Lubrizol
Gets New CEO
Lubrizol appointed James Hambrick, currently
company president, as chief executive officer.
Hambrick replaces the retiring William Bares
effective April 26, 2004. Bares will remain
chairman through the end of the year. Hambrick
has worked for Lubrizol since 1978.
Pannonplast
Gets New Head
Hungary's Pannonplast has appointed board
member Csaba Zoltᮠto replace chief
executive officer and chairman Jᮯs Ill鳹
effective immediately. Ill鳹 was
dismissed for poor performance, particularly
related to his failure to complete a
reorganization that was expected to reduce
operating costs, manage the company's
investment portfolio and optimize the tax
obligations of Pannonplast. Currently the
company is expecting higher than anticipated
losses for 2003.
4th
Quarter Performance Mixed in Europe
Akzo Nobel, BOC and Henkel reported profits
greater than those expected by analysts. Ciba
Specialty Chemicals' performance was less than
expected, posting lower sales and earnings.
ICI also reported a decline in sales and
earnings, while Shell Chemicals experienced a
loss for this period. Akzo has received early
bids for two of the businesses it put up for
sale in 2003. ICI is considering the sale of
some of its businesses as a result of its
performance. All companies expect 2004 to be
another difficult year.
Currency
Devaluation in Venezuela
A 17% devaluation of Venezuela's Bolivar from
Bs1600/dollar to Bs1920/dollar will negatively
impact the petrochemicals industry in the
country, according to the Venezuelan Chemicals
and Petrochemicals Association (Asoquim). The
association now expects flat growth in 2004
for Venezuelan petrochemicals, instead of a
continuation of the 15 percent growth
experienced in 2003. Most petrochemical
companies were prepared for the devaluation
because the government's budget proposals had
indicated that it was considering taking this
action.
Free
Trade on Chemicals Continues Between EU and
Mexico
A free trade agreement between the European
Union (EU) and Mexico that covers 55 chemicals
will be extended for an additional three
years. Duty free status for Mexican imports
will be maintained, and Mexico will phase out
its duties on EU imports in an accelerated
time period. The value of the trade for these
chemicals, which include Citric acid and
Methyl salicylate, totaled $130 million (Euro
102 million) in 2002.
Mergers
and Acquisitions Expected to Increase
Public auctions for the assets of companies
like Rhodia, Akzo Nobel, Eastman, Rutgers and
Dynamit Nobel are contributing to a rise in
merger and acquisition activity in 2004. This
increase follows a strong fourth quarter in
2003. Overall M&A activity was very high
in 2003, with $21 billion in mergers and
acquisitions completed. Of these transactions,
67 were valued at over $25 million.
Large deals (over $1 billion) are also on the
rise. Examples include the merger of IMC
Global with Cargill's fertilizer business, Air
Liquide's purchase of Messer Group's gases
business for $2.68 billion, the Blackstone
Group's plans to take over Celanese for $3.1
billion, and the $4.2 billion acquisition of
Nalco by a consortium consisting of
Blackstone, Apollo Management and Goldman
Sachs Capital Partners. Financial buyers are
more active in chemical industry M&A now
and are particularly interested in mega deals
where they have the cash to make the
investments.
Danisco
to Acquire Rhodia's Food Ingredients Business
Danisco will negotiate for the takeover of
Rhodia's food ingredients business and plans
to sign an agreement in the near future, with
the deal expected to close in the second
quarter of 2004. The purchase will include
Rhodia's cultures, hydrocolloids and food
safety products, but will exclude food
phosphates, which is up for sale separately.
Sales for the food ingredients business
reached Euro 211 million (DK1.6 billion) in
2003.
Diosynth
to Lose 350 Jobs in Restructuring
Diosynth, the chemical synthesis business of
Akzo Nobel, will cut 350 jobs and close
manufacturing facilities in Mexico. Jobs will
be lost in Mexico (175), Netherlands (100) and
Scotland (75). Overcapacity in the custom
synthesis market is the main reason for the
reorganization. The site closure in Mexico and
all other job reductions, will take place by
the end of 2004.
Dow
Finalizes Celanese Acrylates Deal
Dow Chemical completed its acquisition of
Celanese's acrylates business for an
undisclosed sum. With the purchase Dow gains a
production facility in Clear Lake, Texas plus
the acrylates product line including
inventory, intellectual property and
technology for crude Acrylic acid, Glacial
acrylic acid, Ethyl acrylate, Butyl acrylate,
Methyl acrylate and 2-Ethylhexyl acrylate.
Celanese will continue to provide some
contract manufacturing services to Dow, and
Dow will supply Celanese with some acrylates
products.
Spolchemie
Up for Bids
The 65.7 percent stake that the Czech
government has in Spolchemie, a manufacturer
of inorganic chemicals, organic dyestuffs, and
resins, is up for bid. Bids must be placed by
February 27th. The state owns 53.7 percent of
the company directly, and an additional 12
percent through the National Property Fund.
FDA
Approves Boehringer's Spiriva
The U.S. FDA approved Boehringer Ingelheim's
(BI) Spiriva HandiHaler (Tiotropium bromide
inhalation powder) for the treatment of
chronic obstructive pulmonary disease (COPD).
The drug is the first inhaled treatment for
COPD. Analysts predict sales of Spiriva to
peak at approximately $2 billion. It is
already available in over 40 other countries.
BI will co-market the drug with Pfizer.
FDA
Approves Erbitux
The U.S. FDA approved Imclone's Erbitux (Cetuximab),
the first monoclonal antibody approved to
treat advanced colorectal cancer (CRC) that
has spread to other parts of the body. Imclone
and marketing partner Bristol-Myers Squibb
Company (BMS) expected to launch the drug by
the end of February. Lonza Biologics'
Portsmouth, N.H., manufacturing facility has
also been approved by the FDA for initial
production of Erbitux. Eventually production
will be moved to Imclone's BB36 facility in
Branchburg, N.J. once approval is received for
this site.
Glaxo
to Pay $400 Million to Settle Antitrust Case
GkaxoSmithKline (GSK) will pay a total of $400
million (GBP 200 million, Euro 322 million) to
settle a U.S. antitrust case concerning its
anti-inflammatory drug Relafen. Of the fees,
$175 million (Euro 141 million) will go to
direct purchasers and wholesalers. Another
portion will cover a claim from a group of
indirect purchasers that includes consumers.
The remainder is accounted for in settlements
previously paid to Israeli pharmaceutical firm
Teva, a group of drug stores, and Eon Labs, a
U.S. generics manufacturer.
J&J
to Buy Out European Pharma JV
Johnson & Johnson plans to purchase the 50
percent share of Johnson & Johnson MSD
Europe that belongs to Merck. Financial terms
of the deal were not disclosed. Johnson &
Johnson MSD Europe is a non-prescription
pharmaceuticals joint venture and will become
a wholly owned subsidiary of J&J upon
completion of the acquisition. The other 50:50
joint venture between the two companies -
Johnson & Johnson Merck Consumer
Pharmaceuticals - will not be affected by the
deal.
Pfizer
Wins Celebrex Appeals Court Decision
A U.S. Court of Appeals affirmed an earlier
trial court decision stating that sales of
blockbuster arthritis drug Celebrex did not
infringe upon a patent on COX-2 inhibitors
held by the University of Rochester. The
university is currently evaluating whether
further appeals will be made. The original
suit was filed by the university in April of
2000 against Pharmacia, which is now part of
Pfizer.
Roche
Completes Igen Acquisition
Roche completed its $1.4 billion (Euro 1.2
billion) acquisition of biopharmaceutical
company Igen, resolving a patent dispute
between the two over Igen's Origen technology.
BioVeris, the new entity formed from the
merger, became listed on the Nasdaq exchange
as of February 17th.
GTC-Biotherapeutics
Files for Approval of Recombinant Therapeutic
Protein Product
GTC Bio-therapeutics Inc. (Framingham, Mass.)
submitted the first ever transgenic drug for
approval. ATryn is a recombinant therapeutic
protein product manufactured by transgenic
animal technology. The recombinant human
antithrombin is designed for the treatment of
hereditary antithrombin deficiency and was
submitted for approval in Europe. The company
has not indicated when it will submit the drug
for approval in the U.S.
Monsanto
Gets Green Light for GM Products in China
Monsanto has received approval from the
Chinese government for the importation of five
genetically modified products. Specific
certificates were granted for the Roundup
Ready soybeans, one version of Roundup Ready
corn, YieldGard Corn Borer, Bollgard cotton,
and Roundup Ready cotton. Monsanto's GM
soybeans have been permitted into China for
the past two years, but the safety
certificates are expected to result in more
reliable availability of the products. The
company also hopes to get approval for
additional products including Roundup Ready
canola, a second version of Roundup Ready corn
and YieldGard Rootworm in the near future.
Patent
Decision on Bt Goes to Monsanto
The U.S. Patent Office's Board of Patent
Appeals and Interferences ruled that Monsanto
was the first company to invent the technology
for synthetic Bacillus thuringiensis (Bt)
genes in plants. The technology, which uses a
genetic modification of Bt, makes certain
plants more insect-resistant. Dow Agro says
the decision has no impact on the sales or use
of its Herculex-corn insect protection
technology, but the company is considering an
appeal.
Chinese
Soda Ash Exports Impacted by Feedstock
Shortages
A shortage of coal and salt feedstock may
impact China's ability to export synthetic
soda ash. Production costs have already
increased, causing many suppliers to sell
their material on the domestic market instead.
Another 1 million metric tonnes per year of
capacity is expected online this year.
Producers may have to cut back, and exports
may only grow by 100,000-200,000 metric tonnes
rather than the hoped for 400,000 metric
tonnes originally projected. The decreased
exports from Asia are expected to boost U.S.
exports of soda ash by about 7.5 percent.
Sasol
and Petronas to Merge Liquid Fuels Business
Sasol (South Africa) and Petronas (Malaysia)
have agreed to merge their liquid fuel
businesses. The new company will combine the
marketing and distribution activities of both
and will have a total refining capacity of
approximately 14 billion liters per year. Both
Sasol and Petronas will own 37.5 percent of
the new company. The remaining 25 percent will
be owned by new and existing black economic
empowerment (BEE) partners. The deal is
expected to be finalized in the fourth quarter
of 2004.
U.S.
Oil Companies See Rise in Petrochem Earnings
ExxonMobil experienced a rise of earnings for
its chemical unit from $76 million to $476
million for the same quarter one year ago.
Chevron Phillips Chemicals (CPChem), which is
50 percent owed by ConocoPhillips, reported
$11 million in earnings as compared to a $13
million loss in the same period last year.
Asian
Markets See Rising Polymer Prices
Prices of many polymers in Asia have been
driven to their highest levels seen since
mid-1995 by increasing feedstock costs. The
trend is not expected to last, though, as long
term demand hasn't increased. Margins also
remain much lower than in the early 1990's.
Polyethylene, Polypropylene, Polystyrene, and
Polyvinyl chloride all experienced price
increases for exported materials over recent
weeks. Even domestic prices in China remain
strong and are expected to continue to rise in
the short term.
Polymer
Consumption Expected to Grow Rapidly in
Central and Eastern Europe
According to leading petrochemical industry
executives in Central and Eastern Europe (CEE),
that region of the world will experience
growth of polymer consumption through 2010 at
approximately twice the rate experienced by
Western Europe. The annual growth rate for
polymers in CEE is predicted to be about 5 to
8 percent. Companies such as Slovnaft, Vegyi
Kombinat (TVK), the Basell Orlen Polyolefins
(BOP) joint venture and Danish-headquartered
Borealis are constructing new plants or
expanding production of polymers such as
Polypropylene and High density polyethylene (hdPE).
EC
Remains Committed to Kyoto Protocol
The European Commission (EC) will remain
committed to full implementation of the Kyoto
Protocol by the European Union (EU). Under the
protocol, the EU is required to reduce its
greenhouse gas emissions by 8 percent between
1990 and 2008-12. Each member state has
accepted a target level for limiting or
reducing its greenhouse gas emissions. The US
does not plan to ratify the protocol, but the
agreement is expected to take effect if Russia
ratifies it.
Sustainable
Development Council Formed in China
The China Business Council for Sustainable
Development (CBCSD), formed jointly by the
Chinese government and the World Business
Council for Sustainable Development (WBCSD),
will work to encourage the implementation of
sustainable business practices in China. The
council, headed by Sinopec chairman Wang
Jiming, will also advise the Chinese
government and work with the WBCSD on global
issues.
