NEWS OF THE WEEK
FINANCIAL FIRMS BUY H. C. STARCK ACQUISITION: Sale of metals maker will help Bayer's life sciences push
H. C. Starch scientist examines solid-oxide fiiel-cell components.
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AYER PLANS TO SELL its H. C. Starck sub sidiaryfor $1.6 billion to U.S.-based financial investors Advent International and the Carlyle Group. The German firm will use the proceeds to advance its life sciences strategy and help finance the $22 billion purchase of pharmaceutical maker Schering. The sale will close at the beginning of 2007, pending regulatory approvals. Bayer will pocket about $920 million; the remainder will cover debt and pension liabilities. Still pending is the sale of cellulosics maker Wolff Walsrode, which Bayer also put on the block to fund the Schering purchase.
GLOBAL WARMING CASE TO HIGH COURT ENVIRONMENTAL POLICY: Supreme
Court weighs regulation of greenhouse gas emissions
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N NOV. 29, THE SUPREME COURT heard oral arguments in the first case on global warming ever to come before the justices. In Massachusetts v. EPA, the court must decide whether EPA has authority under the Glean Air Act to regulate greenhouse gases—carbon dioxide chief among them—from new cars and trucks. The case was brought by 12 states and four jurisdictions and is led by Massachusetts. Massachusetts Assistant Attorney General James R. Milkey urged the Court to force EPA to revisit its 2003 decision not to regulate C0 2 and other greenhouse gases from new vehicles. The Glean Air Act, he pointed out, says EPA "shall" set standards for any air pollutant that "may reasonably be anticipated to WWW.CEN-0NLINE.ORG
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The buyers made the winning bid in an auction that included both financial and corporate investors. According to press reports, bidders in the final round included Bain Capital and Belgian metals maker Umicore. Starck, headquartered in Goslar, Germany, manufactures metal and ceramic powders and parts. It also produces specialty chemicals, including electrically conductive polymers. The firm employs 3,400 people and had global sales last year of $1.2 billion. Although Starck's sales last year were up 31% from 2004, some analysts suggest that the purchase price was lower than it could have been because of a decline in profitability at the unit in recent years. Heinz Heumiiller, Starck's managing director, says Starck will "work to further improve performance." The investment firms say they will support the expansion of Starck's business, but they also say their game plan is to sell the company in an initial public offering within the next three to five years. The winning bid shows that financial buyers maintain a keen interest in chemical assets, even though they have been more cautious in 2006 than last year. According to Peter Young, president of investment banking firm Young & Partners, financial buyers completed 11 major transactions involving chemical businesses in the first nine months of 2006. In the same period in 2005, they completed 20 deals.—MARC REISCH
endanger public health or welfare." The law also states that welfare includes effects on climate and weather. The justices spent much of the time at the hearing discussing whether Massachusetts and the 11 other states have standing under the Constitution to challenge EPA's decision not to regulate greenhouse gas emissions from vehicles. Milkey pointed out that Massachusetts would lose 200 miles of coastline to rising seas if C0 2 emissions are not reduced. He said the state "would be hit particularly hard because we're also subject to land subsidence." Justice Antonin Scalia noted that constitutional standing requires imminent harm and asked whether the harm is imminent. Milkey responded that sea-level rise is already occurring from the current amount of greenhouse gases in the air and that situation will get worse as concentrations rise. He also pointed out that "New York State could well lose thousands of acres of its sovereign territory by the year 2020" if emissions are not reduced. Overall, on the basis of the questions they asked, the justices' views about this case during the hearing seemed fairly evenly divided. The Supreme Court ruling will affect existing or future laws in the 12 suing states, which want to limit C0 2 emissions from new cars and trucks in the absence of EPA action. What's more, if the Court sides with the states, it will open the door for other jurisdictions to follow suit and begin regulating those emissions. A decision is expected in July 2007.—B ETTE HILEMAN
DECEMBER 4, 2006
