NEWS OF THE WEEK PLASTICS
GEORGIA GULF WILL BUY ROYAL GROUP Deal will create a large, back-integrated vinyl products supplier MOVIN' ON UP Georgia Gulf has a chlorovinyls complex in Plaquemine, La.
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N A MOVE THAT WILL FORM A
company integrated from brine to vinyl siding, polyvinyl chloride maker Georgia Gulf has agreed to purchase Woodbridge, Ontariobased building products firm Royal Group Technologies in a transaction valued at about $1.6 billion. Georgia Gulf is offering $11.82 per share for the company, 43.5% more than Royal's closing price on the day before the merger was announced onJune 9. About 70% of Georgia Gulfs $2.3 billion in 2005 sales came from chlorovi-
WATER
nyl products such as vinyl chloride, PVC resin, and vinyl compounds. Royal's $1.6 billion in sales last year was mainly from pipe, moldings, window profiles, siding, sheds, and other PVC products. W i t h the deal, Georgia Gulf will join Formosa Plastics and Westlake as U.S. PVC resin companies with large downstream businesses. Georgia Gulf says it will realize $64 million in cost savings from the merger. The company also says it expects to divest Royal businesses with about $200 million in annual sales. The deal puts into doubt the future of Georgia Gulfs aromatic
POLLUTION
GREENER CLEANERS EPA initiative urging phaseout of NPE surfactants receives mixed reviews
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Nonylphenol ethoxylate 14
AST WEEK, EPA KICKED OFF
an effort urging chemical makers and formulators to voluntarily phase out nonylphenol ethoxylate surfactants (NPEs) from detergents. N P E s and their breakdown products, notably nonylphenol, can harm aquatic animals and plants, EPA says. Nonylphenol is resistant to natural degradation, according to the agency, and the amount of this chemical in U S . surface waters is increasing. The agency's Design for the Environment program has identified safer alternatives that it says are comparable in cost to NPEs and readily available. EPA says its new Safer Detergents Stewardship
C & E N / J U N E 19, 2006
Initiative will recognize companies that voluntarily phase out the production or use of NPEs. U.S. formulators used an estimated 500 million lb of NPEs in 2004, about half of which went into detergents. At a June 12 meeting in which EPA unveiled the initiative, reaction from detergent makers and users was mixed. Endorsing the initiative were Procter & Gamble and Unilever, which decided decades ago against including NPEs in their laundry detergents. Another supporter was JohnsonDiversey, a formulator of cleaning products for institutional and industrial customers. JohnsonDiversey pledged to stop adding
chemicals business, from which it currently draws about 30% of its sales. "It is fair to say we are not wedded to this business, as we once were," Georgia Gulf CEO Ed Schmitt said during a conference call with financial analysts. Wall Street hasn't been receptive to the deal, and the call was at times contentious. "At first glance, it is a stretch in terms of the numbers," one analyst said. "The question here is the price you are paying." Frank J. Mitsch, an analyst for BB&T Capital Markets, lowered his rating on Georgia Gulf from "buy" to "hold," writing to clients: "GGC (Georgia Gulf Corp.) has had a successful past in acquisitions (Condea Vista, North American Plastics), but for now, we do not see the same type of upside in the share price than if G G C remained as a stand-alone powerhouse in chlorovinyls." Georgia Gulf shares dropped 14% to $26.23 on June 9. They slipped another 6% onJune 12.— ALEXTULL0
any type of alkylphenol ethoxylate (APE) surfactants, including NPEs, to its products by the end of 2006. But N P E makers and some users of products containing these surfactants oppose the initiative. Robert Fensterheim, executive director of the A P E Research Council, said major producers of N P E s agree with promoting detergents with positive environmental attributes. The agency's initiative, which he described as "a use-anything-but-NPE program," won't achieve that goal, Fensterheim said. N o data suggest that surface waters in the U.S. contain nonylphenol in levels that would trigger EPA concern, Fensterheim continued. "There is no need for a national deselection campaign" targeting NPEs, he said. Trade associations for commercial laundries said the initiative would drive up their detergent costs.—CHERYL H0GUE WWW.CEN-0NLINE.ORG
