COVINGTON, KY, and WILMINGTON, DE, Nov. 13, 2008 -- Ashland Inc. today completed its acquisition of Hercules Incorporated, creating a leading specialty chemicals company serving many of the world's most essential needs and industries. Each share of Hercules common stock outstanding was exchanged for $18.60 in cash and 0.093 of a share of Ashland common stock. A letter of transmittal and instructions for exchanging Hercules shares for shares of Ashland stock and cash consideration will be mailed shortly to the Hercules shareholders of record at the close of business on Nov. 13, 2008.
"This is a landmark day for our combined employees, customers, shareholders and all those with whom we interact," said James J. O'Brien, Ashland chairman and chief executive officer. "Together, we now begin working to build an exciting new future, confident that our people, technologies, products and services will drive our growth for years to come."
Transformation overview
Ashland now comprises a core of three specialty chemical businesses that will drive the company both strategically and financially, generating approximately 75 percent of total EBITDA on a pro forma basis. These businesses -- paper and water technologies, specialty resins, and specialty additives and functional ingredients -- hold strong market positions and promising global growth potential. Ashland's logistics efficiencies and well-developed marketing capabilities in consumer markets complement its core businesses and enhance its ability to deliver valued products and services.
"This transaction better positions Ashland to deliver more stable and predictable earnings, generate stronger cash flows and gain access to higher growth markets worldwide, most especially those in emerging economies," said O'Brien.
Ashland anticipates approximately $120 million in annual run-rate savings by eliminating redundancies and capturing operational efficiencies by the end of fiscal year 2010.
"Our integration team, guided by Ted Harris and supported by key representatives of both companies, has already provided a solid foundation for our continued development as one company," said O'Brien. "Their ongoing management of this activity is focused on successfully integrating the best processes from both companies, achieving our synergy and cost-saving targets and pursuing the new opportunities for growth."
The expanded international presence of Ashland as a result of the transaction will increase revenue derived outside North America to roughly 35 percent of the total $10.7 billion of pro forma revenue for the 12 months ended Sept. 30, 2008.
New commercial structure
Ashland's new structure, incorporating the former Hercules businesses effective today, is composed of five commercial units:
• Ashland Hercules Water Technologies, a $2 billion specialty paper and water chemicals business formed from the related operations of Hercules and Ashland;
• Ashland Performance Materials, the specialty resins business serving construction, infrastructure, energy and transportation segments;
• Ashland Aqualon Functional Ingredients, a fast-growing business of specialty additives and functional ingredients derived from renewable resources, and serving personal care, pharmaceuticals, food, construction, transportation and other industries;
• Ashland Consumer Markets, the Valvoline® lubricants, automotive appearance and service business; and
• Ashland Distribution, North America's leading distributor of chemicals, plastics, composite materials and environmental services.
Transaction Details
The cash portion of the transaction was funded through a combination of cash on hand and debt financing from Bank of America and Scotia Capital. Citigroup Global Markets Inc. acted as financial advisor, and Squire, Sanders & Dempsey LLP acted as legal counsel, to Ashland. Credit Suisse Securities (USA) LLC acted as financial advisor, and Wachtell, Lipton, Rosen & Katz acted as legal counsel, to Hercules.
The corporate headquarters for Ashland will remain in Covington, Ky. The Hercules administrative facility in Wilmington, Del., now becomes the operations center for the Ashland Aqualon Functional Ingredients and the Ashland Hercules Water Technologies commercial units.
To capitalize on the opportunities of emerging economies, the company recently repositioned the operations center for its Ashland Performance Materials commercial unit to Barendrecht, the Netherlands, where it can serve growing demands in Eastern Europe and as a central point for operations in the Americas and Asia Pacific. Ashland Consumer Markets (Valvoline) will maintain its operations base in Lexington, Ky., and Ashland Distribution will continue to be based in Dublin, Ohio. A series of technical and research and development centers will also be maintained around the world.
Ashland Inc. provides specialty chemical products, services and solutions for many of the world's most essential needs and industries.
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