Ashland acquires Hercules in cash-and-stock transaction

By Lisa Kerner

Charlotte, N.C., Nov. 13 - Ashland Inc. completed its acquisition of Hercules Inc., the companies announced on Thursday.

As a result of the acquisition, Ashland now comprises a core of three specialty chemical businesses: paper and water technologies, specialty resins, and specialty additives and functional ingredients.

The three specialty chemical businesses are expected to generate approximately 75% of total EBITDA on a pro forma basis, an Ashland news release said.

"This transaction better positions Ashland to deliver more stable and predictable earnings, generate stronger cash flows and gain access to higher growth markets worldwide, most especially those in emerging economies," Ashland chairman and chief executive officer James J. O'Brien said in the release.

Ashland said it expects approximately $120 million in annual run-rate savings by eliminating redundancies and capturing operational efficiencies by the end of fiscal year 2010.

In July, Ashland, a Covington, Ky., diversified chemical company, agreed to acquire Hercules in a stock-and-cash deal valued at $23.01 per Hercules share, or about $3.3 billion including debt.

Hercules shareholders received $18.60 per share in cash plus 0.093 shares of Ashland common stock for each share of Hercules common stock.

Ashland said it funded the cash portion of the transaction using a combination of cash on hand and debt financing from Bank of America and Scotia Capital.

Citigroup Global Markets Inc. advised Ashland, and Credit Suisse Securities (USA) LLC advised Hercules.

Hercules manufactures and markets specialty chemicals for making a variety of products for home, office and industrial markets. The company is based in Wilmington, Del.

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