COVINGTON,
Kentucky (AP) — Ashland Inc. will
spend about $3.2 billion to buy International Specialty Products Inc., the
company said Tuesday, expanding its presence in high-growth markets including
personal care, pharmaceutical and energy.
Ashland
is just the latest entity to snap up a high-margin specialty chemical company,
following Berkshire Hathaway’s $9 billion acquisition of Lubrizol, and Dow
Chemical’s $15 billion buyout of Rohm & Haas.
The latest deal, expected to close before the end of the
fourth quarter, should immediately add to Ashland’s
earnings per share. The transaction is expected to save Ashland approximately $50 million by the
second year after the acquisition’s closing by eliminating redundancies and
making operations more efficient.
The deal “broadens Ashland’s presence within attractive growth
areas like skin, hair and oral care, which are large and fast-growing segments
of the $5-billion-plus personal care specialty ingredients market,” said
Chairman and CEO James O’Brien.
The company will more than double the size of its our
highest-margin functional ingredients business, O’Brien said.
The Covington,
Kentucky, chemical company plans
to use available cash and committed financing from several banks including
Citi, The Bank of Nova Scotia, Bank of America Merrill Lynch and U.S. Bank
National Association.
If financing falls through, ISP could require Ashland to pay a $413
million termination fee.
The deal requires U.S. and European Union regulatory
approvals.
ISP, based in Wayne,
New Jersey, had approximately
$1.6 billion in sales for the year ended March 31.
