The Chemical World This Week
CELANESE MOVES TO ACQUIRE OLIN In a move that caught the chemical industry off guard last week, Celanese Corp. announced that it and Olin Corp. had agreed to merge. The resulting company, which would be named Celanese-Olin, would become the sixth largest chemical producer in the U.S., with 1977 chemical sales totaling $2.9 billion out of total sales of $3.8 billion. Terms of the agreement in principle between the two companies call for Celanese to pay $30 per share in cash for up to 30% of Olin common stock. The remaining Olin shares each will receive a unit consisting of three eighths of a share of Celanese common and one eighth of a share of a new Celanese convertible preferred stock. Each share of the new preferred will have a par value of $100, a dividend of $8.50, and will be convertible into 1.85 shares of common stock. The value of the proposed merger is more than $700 million. The proposed merger is subject to the approval of the boards of directors of both companies, execution of a definitive merger agreement, filing with appropriate regulatory bodies, and approval of the stockholders of both companies. The move comes after a dramatic turnaround at Olin in the past 10 years. Net income from continuing operations has increased 214% since 1972, but net sales have increased just 64% during the same period. Profit margins based on earnings from continuing operations have increased from 2.7% in 1972 to 5.3% in 1977. Olin has not fared so well in the first half of 1978, however. Net sales for the first half were $762.4 million, down 19% from $769.4 million in first-half 1977. Net income fared even worse. It was $29.7 million in the first half of 1978, down 40% from $49.7 million in first-half 1977. Most of the drop was in the first quarter, however, when net income declined 83% from the level of a year earlier. At the time, Olin blamed the poor performance on work stoppages caused by severe winter weather, power cutbacks during the coal strike, low demand, cost-price pressures in some chemicals, and a three-month strike at the company's largest plant. Celanese's record over the past few years has been almost the opposite of Olin's. Profit margins generally have 4
C&EN Oct. 9, 1978
sunk during the past five years, with sales increasing about 68% during the period while earnings increased only about 37%, slowed by the company's poorly performing investment in fibers production. However, there has been somewhat of a turnaround this year. Sales for the first half were $1.3 billion, up 10% from $1.2 billion the same period last year. Earnings for the period increased 24% to $42 million from $34 million last year. The largest part of this earnings gain occurred in the first quarter, when profits surged 73% to $19 million from
$11 million in the same period in 1977. The Celanese-Olin combination is explained by the two companies as creating a company with a more diverse product line. At the same time, they say, the new company will have broader financial resources to meet capital requirements. One thing the companies don't say is that the merger may provide another challenge for the skills of Olin's president, John M. Henske, who is credited with much of Olin's progress since his arrival from Dow Chemical in 1969. D
Antibiotic target of major synthesis Total synthesis of the polyether antibiotic monensin has been achieved by Dr. Yoshito Kishi at Harvard University. He described this synthetic coup last week to a rapt audience at Metrochem '78 in South Fallsburg, N.Y.
*'This is a major synthetic achievement for him," a chemist at one drug firm tells C&EN. "Polyether antibiotics are an important class just now. They present unique problems in synthesis." Building of this molecule opens the
Antibiotic synthesis links components at sensitive center
