CHICAGO (June 20, 1:45 p.m. EDT) — The combined Geon Co./M.A. Hanna Co. compounding giant will operate as PolyOne Corp., a name that reflects its desire to be a single source for its customers, as well as its No. 1 ranking in the U.S. compounding market.
Company officials unveiled the new name, as well as some details of the combined firm's strategy, at a June 20 news conference at NPE 2000 in Chicago.
"The name was developed in order to describe the important character of the new company," said Hanna Chairman and Chief Executive Officer Phillip Ashkettle, who will serve as chairman and CEO of the new firm. "We're No. 1 in several markets and we plan to remain No. 1."
Officials expect the deal to close in early August. They do not anticipate any antitrust or regulatory challenges.
The deal unites Geon (Booth S5462), North America's largest PVC compounder, with Hanna (Booth S3437), a leader in North American color-compound and resin-distribution markets, into a business with $3.5 billion in annual sales, 10,000 employees and 80 manufacturing sites in more than 20 countries.
The merger is being done as a cashless stock swap, which officials said will help keep both balance sheets intact without one firm having to pay a premium to the other's shareholders.
As a result, PolyOne will begin with a war chest of between $500 million and $1 billion available for growth and acquisitions, according to Geon Chairman and CEO Thomas Waltermire, who will replace Ashkettle as PolyOne CEO in 2002 and as chairman in 2004.
"We'll continue to have a very strong acquisition strategy," Ashkettle said. "We see more consolidation needing to take place in the market and we've identified ourselves as the leaders of that."
PolyOne will retain the market-focused sales and marketing approach, which Geon has in place and that Hanna had adopted shortly before the May 8 merger announcement. Ashkettle said the firm won't have "supersellers" selling all of the firm's products but will have total market efforts coordinated by management teams.
Waltermire also dispelled rumors that PolyOne would sell off Hanna's resin distribution unit, which some industry observers thought could be seen as a noncore business.
"We've been asked if distribution is strategic, and we want to make it clear that it absolutely is," Waltermire said. "There are a lot of products out there that we don't manufacture ourselves that our customers need. The more products we bring to them, the more value we have."
Officials also added that Hanna and Geon each have plans in place that will allow the firms to exceed the $50 million in cost savings that they indicated when the merger was first announced.
Ashkettle said additional improvement could come from the creation of a consolidated raw material purchasing plan. Hanna never had such a plan, opting to let individual business units handle their own transactions in that area.
PolyOne's engineered films business, which Geon acquired in 1998, could also grow by introducing films made from the polyolefins and engineering resins that Hanna compounds. Hanna's color expertise also could allow for growth in films.
The new firm could move into non-PVC film or sheet, but would stay away from high-volume commodity film manufacturing, Waltermire said.
An improving stock price could give PolyOne additional currency for growth, Ashkettle said, but Wall Street hasn't been kind to Hanna or Geon stock since the merger was announced.
Geon stock stood at around $22 per share May 8, but traded close to $19 on June 20. Hanna was at almost $12 May 8 but had dipped below $10 per share June 20.
But company officials remain steadfast in their optimism. Ashkettle, who has been in the plastics industry for 20 years, including a stint with Ashland Inc.'s General Polymers resin distribution unit, described the creation of PolyOne as "the biggest change I've seen in the industry."
"Some folks have had difficulty understanding the total `why' of this merger, but those who know the companies see it as an important move in creating change," he said.
PolyOne will be based at an undetermined site in the Cleveland area, apart from Hanna's headquarters in Cleveland and Geon's office in nearby Avon Lake, Ohio.
According to recent industry estimates, PolyOne would rank as the largest U.S. compounder with a 15 percent share of a market valued at $9.6 billion in 1999. Its nearest competitor — GE Plastics of Pittsfield, Mass. — has a market share estimated at 7 percent.