Chemical specialty company Cytec Industries Inc. said Aug. 25 it has agreed to acquire substantially all of Fiberite Inc. for $344 million in cash.
The deal, funded by Cytec loans, supplants an April 20 agreement for Hexcel Corp. to buy most of Fiberite for about $300 million. Hexcel terminated that deal in mid-August rather than accede to Federal Trade Commission concerns.
``Accommodating FTC concerns would have meant a significant dilution in the benefits as foreseen in the original transaction,'' said John J. Lee, Hexcel chairman, president and chief executive officer.
Hexcel instead agreed to buy two Fiberite assets for $37 million: a product line involving composite materials for satellites, and a ``worldwide, perpetual, transferable and royalty-free'' license to existing and developing structural prepreg technology for commercial and military aerospace applications.
Closing is expected by Oct. 31.
Aerospace analyst Paul H. Nisbet with JSA Research Inc. in Newport, R.I., called the compromise deal a setback for Hexcel.
``Obviously, this was a case of [Hexcel] cornering the market,'' he said, ``and the FTC didn't see fit to let it happen.''
``The prepreg playing field is becoming more balanced rather than being tilted in Hexcel's favor,'' said analyst Benjamin Rasmussen, president of BMR Associates in Watchung, N.J.
By Dec. 31, Cytec expects to acquire Fiberite operations that have projected 1997 sales of $250 million. Tempe, Ariz.-based Fiberite employs about 800 and lost almost $10 million on 1996 sales of $218.8 million.
Fiberite preimpregnates fibers of graphite, aramid and glass with resin systems of epoxy, bismaleimide and phenolic to create advanced composite materials. Processors use the prepregs to make interior and exterior components on aircraft and for industrial and recreational applications.
Fiberite sites include Tempe; Greenville, Texas; Orange, Calif.; Winona, Minn.; Delano, Pa.; Newark, Del.; Ostringen, Germany; and Courcelles-les-Lens, France.
The Hexcel deal excluded the Orange and Ostringen operations.
FTC had particular concerns about Hexcel acquiring the structural graphite prepregs capability of Fiberite's so-called crown-jewel Greenville site. Hexcel makes structural graphite prepregs in Livermore, Calif.
In major increases in its critical mass, Hexcel had acquired Hercules Inc.'s composites products division in June 1996 and Ciba-Geigy Ltd.'s composites unit in February 1996. Analysts forecast that Stamford, Conn.-based Hexcel will have 1997 sales of more than $920 million.
Cytec, based in West Paterson, N.J., makes specialty chemicals, and adhesives and advanced composites for the aerospace materials segment. The firm reported 1996 profit of $136.1 million on sales of $1.3 billion.
Cytec signed the agreement to buy almost all of Fiberite's assets and liabilities from an affiliate of intermediary Stamford Capital Group Inc. of Stamford, Conn.
In April, Stamford FHI Acquisition Corp. obtained the rights to purchase Fiberite not later than Aug. 31 from current owners DLJ Merchant Banking Partners LP of New York and Carlisle Group LP of La Jolla, Calif.
In a highly leveraged deal, DLJ and Carlisle had acquired the Fiberite business from units of Imperial Chemical Industries plc in October 1995 for $113.3 million plus costs of $5 million.