(AP) — Swiss specialty chemicals and biotechnology company Lonza Group Ltd.
said Monday it will buy Arch Chemicals Inc., a maker of antibacterial products,
for $1.2 billion in cash.
The deal values the Norwalk,
Connecticut, company at $47.20
per share, and also includes $170 million in debt. Lonza will start a tender
offer for Arch Chemicals shares by Friday, and it expects to complete the
acquisition later in 2011. The board of directors of Arch Chemical voted in
favor of the sale and recommended shareholders tender their shares in support.
Lonza said it will have about $1.6 billion in annual revenue
from sales of bacteria-killing products, making it one of the leaders in that
market. Arch Chemicals reported $1.38 billion in revenue in 2010, and Lonza
said $1.2 billion of that total came from sales of products used to kill
harmful bacteria in water, in industrial applications, for wood protection, and
for personal care. Lonza said the market for antibacterial products is growing
steadily and is worth about $10 billion per year.
Shares of Arch Chemicals surged 11 percent Friday despite
weak economic news, and the stock gained another $4.70, or 11 percent, to
$46.87 in morning trading while the broader markets slid. The stock hit a
52-week high of $46.99 earlier in the session and has traded as low as $29.29
over the past year. Lonza said it is offering a premium of 36.7 percent to the
stock’s average closing price over the last 30 days.
Arch Chemicals has approximately 3,000 employees and 23
manufacturing and research sites. Lonza spokesman Dominik Werner told The
Associated Press some jobs will be shed after the deal closes. Werner said any
job cuts would probably come from administration and would not affect
“A good part of the cost reduction is based on the fact
that we’re combining two corporations and so we don’t need the corporate
overhead of Arch,” he said. “There will certainly be job reductions
there, but how much and when is still open.”
Lonza shares were down 0.1 percent at 66.75 Swiss francs
($80.04) on the Zurich
exchange by mid-afternoon.