NEWTOWN SQUARE, PA. - Arco Chemical Co. announced an agreement to acquire Olin Corp.'s toluene diisocyanate and aliphatic diisocyanate businesses for $565 million. The purchase received approval from the boards of directors of both companies, and is expected to close in late 1996, pending regulatory approval. The acquisition will be funded with cash on hand and short-term debt, Arco announced.
As part of the deal, Arco will get Olin's TDI and ADI facilities in Lake Charles, La., and certain patents and process technologies. Those plants employ about 430 in manufacturing and 50 in process development. The TDI plant has capacity to produce 250 million pounds per year, and the ADI facility can make 17 million pounds per year, Arco said.
The operations produce key ingredients for urethane foams, industrial coatings, adhesives and sealants.
Alan Hirsig, Arco's president and chief executive, said the company has been looking to increase the value of existing propylene oxide and derivatives businesses, including expansion of urethane markets.
``In addition to the immediate and positive effects on sales and earnings, Arco receives a low-cost U.S. manufacturing facility, our first significant TDI sales in the North American market, and a strong customer base in Asia and Latin America,'' he said in a news release.
For the year ended Dec. 31, sales from Olin's TDI and ADI operations totaled $260 million, according to Olin, and about $160 million for the six months ended June 30.
Arco, based in Newtown Square, entered the isocyanates market in 1995 with the acquistion of Rhone-Poulenc's TDI technology and European-based business.
With the addition of Olin's assets, Arco will become the No. 2 marketer of TDI in the United States and, in combination with its European business, will have 19 percent of the world supply.
``Our strategy is to be either No. 1 or No. 2 in each area we operate,'' said Arco spokesman Gerald Davis.
Olin, headquartered in Norwalk, Conn., announced in October several moves designed to increase shareholder value. The plan, in part, includes selling its polyol, glycol and surfactants businesses, involving production and related facilities at its Doe Run plant in Brandenburg, Ky. Those businesses, with 450 employees, generated sales of about $185 million for the year ended Dec. 31, and $95 million for the six months ended June 30.
Olin also will spin off two divisions into an independent company, use a portion of the divestiture proceeds to repurchase up to 10 percent of its common stock and split its common stock two for one.