Ashland completes acquisition of ISP for US$3.2B, integrating company into its Ashland Aqualon Functional Ingredients unit under new name of Ashland Specialty Ingredients
Liling Tan
COVINGTON, Kentucky
,
August 23, 2011
(press release)
–
Ashland Inc. (NYSE: ASH), a global leader in specialty chemical solutions for consumer and industrial markets, today completed its acquisition of privately owned International Specialty Products Inc. (ISP), a global specialty chemical manufacturer of innovative functional ingredients and technologies. The purchase was an all-cash transaction for $3.2 billion, subject to post-closing adjustments for changes in net working capital and certain other items.
“This defining transaction is expected to be immediately accretive and will significantly expand our position in higher-margin, higher-growth end markets, including personal care, pharmaceutical, food and beverage and energy,” said James J. O’Brien, Ashland chairman and chief executive officer. “We are excited about combining ISP’s technologies and capabilities with our own. This acquisition enhances our ability to satisfy the increasing global demand for more technologically advanced consumer and industrial products, and to continue to generate industry-leading innovation and solutions for our customers.”
Integration overview
ISP will be integrated into the Ashland Aqualon Functional Ingredients commercial unit, more than doubling the size of Ashland’s highest-margin business. Effective immediately, the combined unit will be called Ashland Specialty Ingredients. Going forward, Ashland Specialty Ingredients is expected to contribute roughly half of Ashland’s EBITDA. In addition, approximately half of Ashland’s overall revenues will now be derived outside of North America.
An integration team with key representatives of both companies is being led by John Panichella, president of the new Ashland Specialty Ingredients business. Ashland anticipates approximately $50 million in annual run-rate savings by the end of the second year through eliminating redundancies and capturing operational efficiencies.
Added Panichella, “The addition of ISP greatly expands the breadth of our technology platforms and provides new resources and capabilities to better capitalize on market opportunities. In particular, we now can offer our customers one of the broadest, most functional portfolios of water-soluble polymers in the world.”
Transaction Details
The transaction was funded through a combination of cash on hand and borrowed funds from Citigroup, The Bank of Nova Scotia, BofA Merrill Lynch and U.S. Bank National Association. BofA Merrill Lynch acted as financial advisor, and Cravath, Swaine & Moore LLP acted as legal counsel, to Ashland. Moelis & Company acted as financial advisor, and Sullivan & Cromwell LLP acted as legal counsel, to ISP.
About Ashland
In more than 100 countries, the people of Ashland Inc. (NYSE: ASH) provide the specialty chemicals, technologies and insights to help customers create new and improved products for today and sustainable solutions for tomorrow. Our chemistry is at work every day in a wide variety of markets and applications, including architectural coatings, automotive, construction, energy, food and beverage, personal care, pharmaceutical, tissue and towel, and water treatment. Visit www.ashland.com to see the innovations we offer through our four commercial units – Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials and Ashland Consumer Markets (Valvoline).
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