29 April 2005
29 April 2005
Borden Chemical, Inc., Resolution Performance Products LLC and Resolution Specialty Materials LLC are to merge to form Hexion Specialty Chemicals.
The three thermoset resin producers earlier this week jointly issued plans to merge, and in doing so will form the worlds largest producer of thermosetting resins. All three companies are owned by affiliates of the private investment firm Apollo Management, L.P. The new company will be named Hexion Specialty Chemicals, Inc.
Hexion Specialty Chemicals is expected to include Bakelite AG, which as previously announced, Borden Chemical has agreed to acquire. The combination of Borden Chemical, RPP and RSM and the acquisition of Bakelite are expected to close in the second quarter of 2005.
Borden Chemical is a global producer of binding and bonding resins, performance adhesives and the building-block chemical formaldehyde. RPP is a worldwide manufacturer and developer of epoxy resins and is the leading global manufacturer of Versatic acids and derivatives. RSM is a global producer of coatings, adhesives, specialty polymers, and ink raw materials. Bakelite is a leading supplier of phenolic and epoxy thermosetting resins and moulding compounds in Europe.
Hexion Specialty Chemicals had pro forma 2004 annual net sales of $4.105 billion, of which 51 percent were derived from North America, 32 percent from Western Europe, and 17 percent from Asia and the rest of the world. Hexion will have approximately 7,000 employees and rank third among North American-based specialty chemical firms in terms of sales. The newly formed company will hold a dominant position in the market with 86 plants in 18 countries and be able to compete globally as a vertically integrated and low-cost manufacturer offering a variety of specialty product lines.
Craig Morrison, president and chief executive officer of Borden Chemical, will be President and CEO of Hexion Specialty Chemicals, which will be based in Columbus, Ohio. Marvin Schlanger, Chairman and CEO of RPP and Chairman of RSM, will become Vice Chairman of the Board of Hexion. William Carter, executive vice president and CFO for Borden Chemical, will assume this role for the combined company.
Morrison said that "the four companies have complementary businesses with outstanding technologies and products, and excellent synergies. The new name represents a combined entity that is different from and stronger than any one of the merging companies. Our increased size and combined financial capability will enable us to better serve our customers, and create new opportunities for employees."
The executive team of Hexion will also include these heads of business units: Kip Smith, president and chief operating officer of RPP, will become President, Epoxy and Phenolic Resins; Jeff Nodland, President of RSM, will become President, Coatings and Inks; Jody Bevilaqua, executive vice president of Borden Chemical, will become President, Formaldehyde and Forest Product Resins; and Sarah Coffin, executive vice president of Borden Chemical, will become President, Performance Products.
Completion of the combination is subject to customary closing conditions including certain regulatory approvals. Borden Chemical, RPP and RSM will continue to operate independently until those conditions are satisfied and the closing occurs.
About the Companies:
Borden Chemical serves its customers through a network of 48 manufacturing facilities in 9 countries. The company employs 2,400 associates and reported 2004 sales of $1.7 billion. It is based in Columbus, Ohio. Apollo Management acquired Borden Chemical in August 2004
RPP is based in Houston and has operations in the United States, Europe and Asia. The company has 950 employees and reported 2004 sales of $996 million. Apollo acquired RPP from Shell Oil Company in November 2000.
RSM was formed from businesses acquired by Apollo Management from the Eastman Chemical Company in August 2004. Based in Houston, RSM has 2,100 employees and facilities in the U.S., Europe and China. The company had 2004 annual sales of $768 million.
Bakelite based in Iserlohn-Letmathe, Germany, has 13 manufacturing facilities in Europe and Asia. The company has 1,700 employees and generated 2004 sales of $699 million.
Editors Note: Borden Chemical and Resolution Performance Products hosted a joint conference call earlier this week to discuss the merger announcements. The webcast will be repeated at 5pm for the next 30 days and can be accessed at http://www.bordenchem.com/aboutUs/WebCast.asp.