Ashland to acquire ISP for $3.2bn
Attractive advanced speciality chemicals portfolio
Ashland Inc and International Specialty Products Inc (ISP) have today announced that Ashland is to acquire privately owned ISP. Ashland will pay around $3.2bn for the business in an all-cash transaction.
ISP is a leading global supplier of speciality chemicals and performance enhancing products for consumer and industrial markets and Ashland says the advanced product portfolio will enhance its position in high-growth markets such as personal care, pharmaceuticals and energy. ISP will add high-value water soluble polymers and other advanced technologies to Ashland's functional ingredients business, and Ashland believes the acquisition will significantly strengthen its functional ingredients active patent portfolio and its team of R&D scientists. The acquisition also adds complementary additives for Ashland’s food and beverage, energy, coatings, adhesives and water treatment markets.
"This defining transaction enables us to significantly expand our market positions in higher margin, higher growth and less cyclical global markets like personal care and pharmaceuticals,” commented James J O'Brien, Ashland chairman and ceo. “It broadens Ashland's presence within attractive growth areas like skin, hair and oral care, which are large and fast growing segments of the $5bn-plus personal care specialty ingredients market. In addition, we expect to more than double the size of our highest margin functional ingredients business."
ISP president and ceo Sunil Kumar said: "We are very enthusiastic about the opportunity to combine ISP with Ashland. Both companies have a strong commitment to serving customers with innovative solutions and technologies. We appreciate Ashland's passion for this business and we believe this combination offers tremendous potential for our customers, key business partners and employees."
O'Brien continued: "Our business models are complementary and we share common capabilities in formulation, application development and polymerisation. We are disciplined in the underlying processes and operations that enable us to manufacture best-in-class products. Given the quality of leadership within both businesses and our success with the integration of prior acquisitions, we are confident we will achieve a smooth transition to a combined company. We are excited about the opportunities for innovation and growth that lie ahead of us."
ISP generated sales of around $1.6bn and EBITDA of around $360m for the 12 months ended 31 March 2011.
The transaction is expected to close prior to the end of the September quarter and is subject to customary US and EU regulatory approval. The purchase price will be subject to post-closing adjustments for changes in net working capital and certain other items and the transaction will be funded through a combination of cash on hand and committed financing from Citi, The Bank of Nova Scotia, BofA Merrill Lynch and US Bank National Association, subject to customary terms and conditions. Under the terms of the stock purchase agreement, if the financing is not available and the other conditions to closing are satisfied, ISP has the right to terminate the agreement and require Ashland to pay a fee of $413m.
