Hercules and BetzDearborn Will Merge in a $3.1-Billion Deal
Emphasizing their "complementary" paper-chemicals businesses, Hercules (Wilmington, DE) will buy BetzDearborn (Trevose, PA) for $2.4 billion in cash and $700 million in assumed debt.
The new business enterprise, a global specialty chemical company with pro-forma, combined 1997 revenues of $3.5 billion, will operate under the Hercules name and will be headquartered in Wilmington. The water and industrial process treatment businesses, excluding paper process, will continue to operate under the BetzDearborn name.
The one-step cash merger transaction, which is subject to approval of BetzDearborn shareholders and customary conditions including regulatory approvals, is expected to close in the fourth quarter of 1998. A committed bank credit facility underwritten by NationsBank will be used to finance the acquisition and refinance existing debt.
A statement from the company indicates that the deal is being driven more by growth opportunities than by cost savings-but that a minimum of $100 million in savings are possible by the combination. ``On the paper chemical side, BetzDearborn is a world leader in process chemicals with strengths in customer service and support," said R. Keith Elliott, Hercules chairman and CEO. By combining their expertise with our leading position in functional chemicals and low-cost manufacturing capabilities, we will be better positioned to meet paper manufacturers' growing demand for integrated services and innovative, cost-effective solutions.''
Hercules will be led by Elliott and William Cook (BetzDearborn's CEO) as co-CEOs, with Elliott serving as chairman of the board and Cook as vice chairman. Other senior managers of the combined company will be: Vincent Corbo, Hercules president and COO and a director, and George MacKenzie, Jr., Hercules SVP and CFO, who will continue in these positions; Dominick DiDonna, senior vice president international and general manager of paper technology at Hercules, who will be SVP of the combined paper business; and Larry Rankin, executive VP at BetzDearborn and chairman of BetzDearborn Canada, who will be SVP of the BetzDearborn water treatment and industrial process business.
BetzDearborn had 1997 sales of $1.3 billion, 6,400 employees and 31 production plants worldwide. Hercules had $1.9 billion in 1997 sales, 7,000 employees, 49 manufacturing plants, two major research centers and eight applications laboratories.