NEWS OF THE WEEK
ACQUISITIONS: Purchase of ISP
will sharpen focus on personal care, drug ingredients
SHLAND HAS agreed to buy specialty chemical
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maker International Specialty Products (ISP) for $3.2 billion in cash. The acquisition will expand Ashland’s portfolio of products for the personal care and pharmaceutical markets, which it has targeted for their high margins, high growth rates, and relative immunity to economic downturns. ISP had $1.6 billion in sales for the 12 months ending on March 31 and earnings before interest, taxes, depreciation, and amortization of $360 million. Ashland’s sales during the same period were $6.0 billion. ISP has 2,700 employees and 17 manufacturing facilities around the world. It’s owned by the family of the late chairman, Samuel J. Heyman, who died in November 2009 (C&EN, March 29, 2010, page 14). In recent years, Ashland has moved away from legacy businesses such as petroleum refining and chemical distribution and toward specialty chemicals. In 2008, Ashland bought Hercules, another specialty chemical maker, for $3.3 billion. That deal brought with it a major water treatment business and a host of specialty additives and functional ingredients. ISP has its own history with Hercules. In 2003, Heyman, who was fond of aggressive takeover attempts, failed in a bid to acquire the company. Ashland now plans to place all of ISP into its Aqualon functional ingredients business, which was originally part of Hercules. About one-third of Aqualon’s current sales are in the personal care, pharmaceutical, and food and bever-
age markets. ISP will add to those sales and contribute water-soluble polymers and additives for energy, coatings, adhesives, and water treatment applications. The ISP businesses boast operating profit margins of 21%, compared with a 10% average for all of Ashland. Ashland CEO James J. O’Brien tells C&EN that ISP fulfills his goal of getting Ashland more involved in drug and personal care ingredients. “We had small but important businesses. But by bringing in ISP, it dramatically changes the positions we have. It is 75% more in some areas,” he says. As a result of the acquisition of ISP, Ashland will get 74% of its revenues from specialty chemicals, compared with 14% in 2004, before the company’s transformaASHLAND
ASHLAND DIVES INTO SPECIALTIES
tion. Valvoline, Ashland’s consumer-branded motor oil company, supplies the balance of the sales. O’Brien states that he won’t sell Valvoline, and he isn’t identifying any ISP businesses that he would divest. Because Ashland will finance the purchase mostly with bank debt, it may see its credit downgraded. Still, Moody’s senior analyst James Wilkins says ISP is a good investment. “Many of ISP’s products are tailored to niche product applications subject to limited competition and high barriers to entry,” he told clients.—
Ashland’s Aqualon functional ingredients lab in Nanjing, China.
MELODY BOMGARDNER
R&D GLOBALIZATION Belgium’s Solvay teams up with South Korean university Continuing an investment trend, Solvay will spend close to $20 million to set up an R&D center on the campus of Ewha Womans University in Seoul, South Korea. The company will also spend $5.5 million on joint research with Ewha, the world’s largest university for women only. The new center will study electronics, lithium-ion batteries, and photovoltaic cells, markets that Solvay supplies with polymers and chemicals. The Belgian company expects to cooperate closely with Ewha centers for nano-technology, biotechnology, and renewable energy.
Although Solvay calls the pact the first between a non-Korean company and a Korean university, an increasing number of international chemical makers are setting up electronic materials R&D centers in South Korea. Later this year, Dow Chemical will complete construction of an R&D facility for display and semiconductor materials that will be large enough for 200 scientists, a spokesman tells C&EN. This month, Japan’s JSR is inaugurating a $7.5 million R&D center for liquidcrystal display materials in South Korea. “We have to move R&D where the market
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is,” comments Nobu Koshiba, the company’s president. South Korea’s microchip exports will likely reach $52.5 billion in 2011, according to the country’s Ministry of Knowledge Economy. The ministry is spending $1.4 billion on a national project to develop technologies in emerging fields such as transparent flexible displays and superfine-print electronics manufacturing. As part of the plan, South Korea wants to attract $15 billion worth of investments from international companies.—JEANFRANÇOIS TREMBLAY
