Aventis
Accepts Higher Bid from Sanofi
Just four days after Novartis announced that it would
begin merger talks with Aventis, Sanofi-Synthelabo
raised its bid for Aventis from $58 billion (Euro 48
billion) to $65 billion (Euro 54 billion). Aventis,
reversing its opinion about the once hostile take-over
attempt, accepted the 14 percent higher bid and has
agreed to merge with Sanofi. The new company, to be
called Sanofi-Aventis, will be headed by Sanofi's
chairman and chief executive Jean-Francois Dehecq. It
will be the third largest pharma company worldwide.
The merger was approved by all Aventis board members
except two employee representatives. Aventis will
withdraw all claims against Sanofi that it made during
its attempt to fight off the initial hostile-takeover
attempt.
The European Commission has approved the merger with
some conditions that Sanofi will address through sale
or licensing of different drug products.
GlaxoSmithKline will purchase the production and
marketing activities relating to the anti-coagulants
Fraxiparine and Arixtra for $548 million (Euro 453
million). Sanofi has also agreed to sell its
colorectal cancer drug Campto (which Aventis has
licensed in several countries) and its vitamin B12
product Delagrange. Rights to other drugs of concern
will be licensed to third parties.
Famous
Quotes of the Month
- Striving for excellence motivates you;
striving for perfection is demoralizing.
(Harriet Braiker)
- The trouble with being punctual is that
there's nobody there to appreciate it.
(Franklin P. Jones)
- A chip on the shoulder is too heavy a piece
of baggage to carry through life. (John
Hancock)
- It takes self-confidence to say "I'm
sorry." (Alexandra Stoddard)
- Remember that as you climb the ladder of
success, there is always someone behind you
keeping it steady. (Jacob M. Braude)
Why
Doesn't Milk in the Refrigerator Taste as Cold
as the Water and Soda?
Actually, milk in the refrigerator does get as
cold as the water and soda. You can test this
easily by sticking a thermometer into each.
But milk at the same temperature as water or
soda doesn't taste as cold to us because milk
contains fat solids whereas water and soda do
not. We perceive solids as less cold than
liquids. This is referred to as "taste
feel." As an experiment, put some
high-butterfat ice cream in the freezer along
with low-fat or nonfat yogurt. You'll find
that the yogurt will taste colder than the ice
cream.
BASF
Looks to China as Center of Asian Activity
China will serve as the key location for
BASF's manufacture of products for the
Asia-Pacific region. The company plans to
produce 70 percent of its goods for this area
in China, and also hopes to gain 20 percent of
global sales from Asia by 2010. BASF will
continue to make investments in the region as
needed, with nearly $2.45 billion (Euro 2
billion) already planned between 2001 and
2005. Company executives predict that by the
year 2015, China will be a larger market than
either the U.S. or Europe.
Borden
Invests in China
In addition to opening a regional office in
Shanghai, Borden Chemical has formed two joint
ventures with Chinese producers. Asia Dekor
(Hong Kong) Borden Chemical Co. Ltd, formed
with Asia Dekor Holdings Ltd., will construct
a new plant to manufacture formaldehyde and
derivative resins for the medium-density and
particleboard market. The plant is expected to
start up in mid-2004. Borden UV Coatings,
created with UVITech (Shanghai), will produce
UV-curable coatings and adhesives for fiber
optics, digital media, and other applications.
Dow
Corning Comes Out of Chapter 11
Dow Corning hopes to emerge from bankruptcy as
of June 1 when it settles $2.35 billion (Euro
1.94 million) worth of silicone implant claims
against the company. The date for the
settlement was established by the US
Bankruptcy Court in Detroit. The only major
change for the company will be that it no
longer will need to refer to the court for
approval for major decisions and investments.
Dow Corning is a 50:50 joint venture between
Dow Chemical and Corning.
Dow
to Reduce Global Workforce Further
As part of a continuing restructuring plan,
Dow Chemical will reduce its workforce by 3000
jobs in addition to the 3500 reductions it
implemented in 2003. Some of the new losses
with take place through normal attrition and
others will result from the sale of
businesses. Other job cuts will be layoffs and
some will come from the closure of facilities.
Overall, the reductions represent 6.5 percent
of Dow's global workforce.
General
Chemical No Longer in Bankruptcy
Completion of a financial reorganization
within General Chemical Industrial Products
has enabled the company to emerge from Chapter
11 bankruptcy protection. The restructuring
included reduction of debt by $106 million
down to $52 million along with acquisition of
a $17.5-million revolving credit facility and
a $45-million term loan from Harbert
Distressed Investment Master Fund. The company
also appointed COO De Lyle Bloomquist as
president and CEO, replacing John Kehoe.
Helm
Invests Euro 65 Million in Expansion Plan
Helm Group will invest Euro 65 million to
expand its operations in China, Poland, the
U.S., Mexico, Brazil and Argentina. Part of
the plan includes a new distribution center
for industrial chemicals in Guangzhou, China,
which will be in addition to existing sales
offices in Beijing, Shanghai, Hong Kong and
Guangzhou. Beginning in late 2006, Helm will
also market ethanol produced by two planned
facilities in Oman as part of a joint venture
with Oman Methanol Corporation.
Huntsman
to Close TiO2 Capacity
Huntsman plans to reduce production of TiO2 in
the UK and South Africa in order to improve
competitiveness. Capacity at its Grimbsy, UK
plant will be reduced by half to 40,000 tonne
per year, while production at the Umbogintwini,
South Africa plant will cut by slightly less
than a third to 25,000 tonne per year.
Approximately 300 jobs will be lost as a
result of the cutbacks, which are expected to
be completed within the next 12 months.
New
U.S. President for Cognis
Paul S. Allen has been appointed head of U.S.
operations for Cognis and is replacing the
retiring Michael Miller. Allen will continue
to serve as head of Cognis' nutrition and
health business.
Chemical
M&A Picking Up in Europe
Analysts predict that the next peak in the
M&A cycle will be in 2009, with activity
already on the rise, especially in Europe.
During 2004 it is estimated that chemical
assets valued at about $12.2 billion (Euro 10
billion) will be on the block in Europe.
Private equity firms are predicted to snap up
greater than 40 percent of the businesses.
Strategic pressures are driving companies to
divest, and many are accepting slightly lower
valuations in order to achieve necessary
restructuring goals.
Global
Recovery for Chemicals Industry
The American Chemistry Council (ACC) reports
that the global chemical industry experienced
strong growth in 2003. Rapid growth in volume
activity within the chemical industry is
occurring around the globe. An increase just
shy of 7 percent in February as compared to a
year ago is a sign that an accelerating
recovery is occurring. ACC attributes the
growth to improving economies in most nations,
inventory re-stocking and the recovery in
end-use manufacturing activity. Strong gains
in Russia, Central & Eastern Europe, India
and China helped fuel the overall growth
numbers. A sustainable recovery in Western
Europe does remain questionable, though, as
this region continues to struggle with the
high value of the Euro. ACC warns, though,
that continued high energy prices could slow
global growth significantly.
New
Intellectual Property Rules in Europe
New rules on the licensing of patents,
know-how and software copyrights were adopted
by the European Commission (EC) with the goal
of reducing the regulatory burden on companies
while still maintaining control over firms
that have large market shares. The new rules
will work in conjunction with updated
antitrust enforcement rules to be published in
May by the European Union. As long as certain
market thresholds are not surpassed, companies
will not have be concerned about whether or
not their agreements are compatible with EU
competition law. The rules can be found at: http://europa.eu.int/comm/competition/whatsnew.html.
Pharma
and Biotech Lead Investments in Academic
Research in Europe
Analysts believe that collaboration in
chemical research and development between
academia and industry will be necessary if the
European Union is to establish itself as a
leader in the global chemicals market. Pharma
and biotech companies have formed the greatest
number of relationships with university-based
research departments, but many chemical
companies are beginning to make alliances as
well. Some are installing company-staffed
satellite facilities at universities, while
others sponsor doctoral students.
Corporate-sponsored symposia on leading-edge
topics such as nanotechnology are also a means
for forging relationships with academic
research groups.
Akzo
to Sell Refinery Catalysts Business to
Albemarle
Akzo Nobel has agreed to sell its refinery
catalysts business to Albemarle for $752
million (Euro 625 million. The deal is subject
to approval by Akzo's works council in the
Netherlands and regulatory agencies and is
expected to be finalized by the end of the
second quarter of 2004. The refinery catalysts
business, with sales of Euro 350 million in
2003, produces fluid catalytic cracking
catalysts (FCC) and hydro processing catalysts
(HPC) for oil refining, and chemical
processing catalysts (CPC). Albemarle will
create a new Polymer Additives business that
will consist of the Akzo catalysts operations
and its existing catalyst products plus other
polymer additives and flame retardants.
Biocides
Sale Complete
Avecia completed the $215 million (Euro 173
million) sale of its biocides business to Arch
Chemicals. Avecia will use the proceeds to pay
down debt. The acquisition expands Arch's
biocides activities in key markets and fits
its growth strategy.
Blackstone
Completes Celanese Acquisition
After obtaining the acceptance of 83.6 percent
of shareholder's votes, private equity firm
Blackstone completed its acquisition of
Celanese. The minimum bid threshold had been
lowered to 75 percent by Blackstone from the
initial 85 percent level. Blackstone will pay
$3.8 billion (Euro 3.1 billion). The new
owners also anticipate squeezing out minority
shareholders in order to gain 100 percent
ownership of Celanese. Once Blackstone
receives a domination agreement from the
German courts, which is expected in the next
few weeks, it will have operating control of
the company.
Dynamit
Nobel Goes to Rockwood Specialties
MG Technologies sold its Dynamit Nobel
chemicals business to Rockwood Specialties
Group for $2.7 billion (Euro 2.25 billion).
Rockwood is getting financial support for the
deal from private equity groups Kohlberg
Kravis Roberts (KKR) and Credit Suisse First
Boston (CSFB). The deal is subject to
regulatory and shareholder approval and is
expected to close in the third quarter of
2004. Rockwood will be gaining Dynamit's
Chemetall, Sachtleben, CeramTec and DNES
businesses. Rockwood, which was formed after
KKR acquired Laporte, will be tripled in size
when combined with the Dynamit Nobel
operations. For MG, the sale is part of a
strategy to become more focused on its
engineering-related activities.
DyStar
Up for Sale
A private equity capital firm is expected to
purchase the textile dye manufacturer DyStar
from joint owners Aventis, BASF and Bayer. The
company has sales of approximately $1.1
billion (Euro 900 million) and is the leading
supplier of textiles dyes in Asia. Margins
have been squeezed in the last few years due
to currency exchange rates.
Johnson
Matthey Acquires Activated Metals
Johnson Matthey acquired Activated Metals
& Chemicals (AM&C) for $43 million.
AMBC manufactures nickel, cobalt and copper
catalysts for synthesis of pharmaceuticals and
specialty chemicals. Johnson Matthey will
merge AM&C's activities into is process
catalysts and technologies business.
Noveon
to be Acquired by Lubrizol
Noveon International will be acquired by
Lubrizol for $1.84 billion. A new wholly-owned
subsidiary will be formed from the merger of
Noveon and Lubrizol's Fluid Technologies
operations. Once the acquisition is complete,
the company's main lube additive business will
account for 50 percent of Lubrizol's
portfolio, as compared to its current 76
percent share. The purchase provides Lubrizol
with a number of high growth specialty
chemicals and materials products. Noveon
recently refiled for an initial public
offering earlier in 2004.
Sasol
Sells Specialty Chemicals to Elementis
Sasol has agreed to sell its specialty
chemicals business Sasol Servo to Elementis
for $58 million (Euro 48.5 million). The
coating additives, pulp and paper chemicals,
and specialty surfactants product lines will
fit well with Elementis' rheology and surface
chemical additives business. Sasol Servo has
annual sales of approximately Euro 120
million. Sasol put the business up for sale as
part of its 2003 restructuring activities.
Themophos
to Acquire Rhodia's European Specialty
Phosphates Business
Thermophos International is negotiating to
purchase the European Specialty Phosphates
Business of Rhodia. An agreement is expected
by the end of the second quarter of*9 2004.
The business has annual sales of $90 million
(Euro 75 million). Rhodia is also moving
forward with the sale of is U.S. specialty
phosphates business and has already sold its
50 percent stake in a joint venture with
Sintex and Algina Inversion to these two
companies. Extractos Naturales Gelymar
manufactures carrageenan-seaweed extracts used
as texturing agents by the food industry and
has annual sales of nearly $17 million.
Ultrafine
Acquired by Sigma-Aldrich
Contract manufacturer Ultrafine has been
acquired by Sigma-Aldrich for an undisclosed
amount of cash. The medicinal chemistry
technology and preclinical and early clinical
phase GMP production capabilities of Ultrafine
will be combined with the process development
and scale up operations of Sigma-Aldrich Fine
Chemicals.
VWR
Sale Complete
Private equity firm Clayton, Dubilier &
Rice has completed the acquisition of VWR
International, the U.S. laboratory
distribution business of Merck KGaA, for $1.68
billion (Euro 1.31 billion). VWR earned sales
of Euro 2.43 billion in 2003 based on its
catalog of 750,000 products that range from
test tubes to traditional chemicals to
biologic materials.
Ephedra
Sales to Stop Immediately
The U.S. District Court in New Jersey refused
to grant an injunction to prohibit the FDA
from enforcing a ban on weight-loss
supplements containing Ephedrine alkaloids (Ephedra).
The FDA's final rule, initially issued in
February 2004, is now effective immediately.
The FDA believes that products containing
Ephedra have been shown to pose unacceptable
health risks.
Four
Indian Pharma Companies to Merge
A new top ten Indian pharma company will be
formed under the name Matrix when Matrix
Laboratories, Vera Laboratories, Fine Drugs
and Chemicals Limited (FDCL) and Calibre
Engineering merge. The new company will have
annual sales of greater than $133 million
(RS5.8 billion). The merger is expected to
increase the ability of the companies to
compete in the market for cGMP production of
active pharmaceutical ingredients (APIs). The
deal has the backing of the boards of the
companies but still requires shareholder
approval.
Generic
Hepatitis C Treatment Approved in U.S.
The U.S. FDA approved Sandoz' generic version
of Ribavarin, a drug used in conjunction with
Interferon for the treatment of hepatitis C.
Sandoz plans to the launch the drug within the
next few months.
Jubilant
Organosys In Process of Making Two
Acquisitions
Jubilant Organosys Ltd (JOL) of India has
signed agreements to acquire two European
companies participating in the pharmaceutical
market. The identities of the companies and
the values of the deals remain undisclosed
because the deals have not yet been finalized
and are subject to regulatory approvals. JOL
will purchase an 80 percent equity stake in
each of the companies. One markets drug
formulations and the other offers regulatory
affairs, dossier development, formulation
development and licensing services.
Recordati
Restructures
Recordati has implemented a restructuring plan
for its pharma intermediates business prior to
putting it up for sale at some point in the
future. The company will permanently close its
biochemical plant in Opera, Italy by the end
of 2004 and will reduce the number of
employees by 100 at its active pharma
ingredients (API) plant in Campoverde, Italy.
The restructuring and sale are a result of
declining profits (down 30 percent in the
first quarter of 2004). Recordati will focus
on production of API's for third parties and
for internal use. Separately, Recordati will
acquire a 49.9 percent stake in Polish
prescription and OTC drug manufacturer Polfa
Kutno.
U.S.
FDA Approves Several Generics
Teva Pharmaceutical Industries, Endo
Pharmaceuticals
Holdings Inc., Mylan Laboratories and Impax
Laboratories
received approval from the U.S. FDA for
generic drugs. Teva
and Endo received FDA approval for their
generic versions of Oxycontin (Oxycodone),
which is marketed by Purdue Frederick Company.
Mylan received approval for its Nitrofurantoin
monohydrate/macrocrystals, a generic version
of Procter &
Gamble's Macrobid. Impax gained approval for
its generic
version of ESP Pharma Inc.'s Declomycin (Demeclocycline
HCl).
Benzene
Prices Reach New Peak
In April benzene contract prices reached a
record high of $2.35/gal fob, which is
$0.10/gal higher than the previous peak price
set in 1987, and up $0.35/gal from March
levels. Spot prices have also risen from
around $2.00/gal in early March to nearly
$2.80/gal due to scheduled maintenance
shutdowns and because traders are covering
short positions. Plants are expected to be
back on stream in May, which will ease some of
the tightness. However, closures of older
plants and the lack of new expansions will
result in tight supply in the long term,
according to analysts. Many benzene buyers are
setting up their own production or finding
suppliers from other regions in order to
secure longer-term positions.
BP
Restructures Olefins and Derivatives Business
for Future Sale
BP will consolidate its olefins and
derivatives (O&D) division into a separate
entity and put it up for sale in 2005. The
O&D business accounts for greater than 50
percent of the operating capital employed in
BP's petrochemical business, which totals $13
billion (Euro 11 billion). The head of the new
business will be Ralph Alexander, who was
recently named as chief executive of BP's
petrochemicals business effective July 1,
2004. The company plans to sell the O&D
business in the second half of 2005, possibly
through an initial public offering (IPO). The
aromatics and acetyls businesses within the
petrochemicals portfolio will be retained. BP
earlier announced plans to sell its fabrics
and fibers and linear and poly alpha olefins
businesses. The divestitures are part of BP's
efforts to make its petrochemicals businesses
more profitable. Analysts value the
underperforming O&D business at between $3
billion and $5 billion (Euro 2.5 billion -
Euro 4.2 billion).
Atofina
to Split Off Chemicals by October
Atofina's new company CIP will be split off by
October 1 of 2004. The new $6.1 billion (Euro
5 billion ) company will be comprised of
Atofina's chlorochemicals, intermediates, and
performance products businesses. CIP will
undergo a restructuring plan that is expected
to take 2-3 years to complete. The remaining
Atofina businesses - the petrochemicals and
plastics business, four specialty chemicals
units and the Grande Paroisse fertilizers
business - will all become individual entities
within Atofina's parent company Total. The
Atofina name will disappear as a result of the
reorganization.
BP
Sells Performance Chemicals to Koch
Flint Hills Resources, a subsidiary of Koch
Industries, has agreed to acquire the
performance chemicals business of BP. Terms of
the deal, which is expected to close by the
end of this quarter, were not disclosed. Koch
gains a 200,000 metric tonne/year purified
Isophthalic acid plant and a 65,000 metric
tonne/year Trimellitic anhydride facility in
Joliet, IL. In a separate transaction, BP
agreed to sell its special product business
outside of Europe to specialty chemicals
company H&R Wasag for an undisclosed sum.
Great
Lakes Sells Polymer Additive Plant to
Schenectady
Great Lakes Chemicals sold its polymer
additives plant in Newport, TN to Schenectady
International for an undisclosed sum.
Schenectady plans to renovate the plant and
will make an announcement about products to be
produced after a "major renovation"
project is completed in 9-12 months. The
purchase for Schenectady follows recent
acquisition of coatings and alkyd resins
producer Chemirco Chemicals and DSM's
phenolics business. Great Lakes will use
proceeds to reduce its annualized costs.
Paint
Demand to Nearly Double
The paints and coatings market is expected to
grow at an annual rate of 3.5 percent through
2007, which is nearly double the growth rate
of 1.9 percent per year experienced from 1997
to 2002, according to the Freedonia Group.
Sales are predicted to increase by 5 percent
annually. The greatest growth will be in the
Asia/Pacific region (excluding Japan), which
will largely be driven by China. North America
and Western Europe will account for nearly
half of the global paints and coatings market
by 2007.
Invista
Sale Price Lowered
Koch Industries will pay $200 million (Euro
165 million) less to DuPont for its Invista
fiber and intermediates business. The new $4.2
billion price tag is 4.5 percent lower than
the original agreed upon number. Analysts
believe DuPont dropped the price because of
higher oil prices and its desire to sell
Invista as quickly as possible.
