Crompton Corp. is buying Great Lakes Chemical Corp. in a deal that will create a plastic additives giant with annual sales of more than $4 billion.
Middlebury, Conn.-based Crompton will own 51 percent of the combined firms. Great Lakes shareholders will receive 2.2 shares of Crompton stock for each share of Great Lakes, which is based in Indianapolis. Crompton employs 4,800 worldwide, while Great Lakes employs 3,800.
The combined firm will be based in Middlebury and probably will retain the Crompton name, according to Crompton spokeswoman Mary Ann Dunnell.
Financially, Crompton lost almost $35 million in 2004 on sales of about $2.6 billion. Great Lakes made a $63 million profit on sales of $1.6 billion.
In a March 9 news release, Robert Wood, Crompton's chairman, president and chief executive officer, said the acquisition should result in annual cost savings of between $90 million and $100 million by 2006. Some of that savings will come from eliminating duplicate jobs, but the exact number of job cuts hasn't been determined.
Both companies make a range of plastic additives including flame retardants, antioxidants and ultraviolet-light stabilizers.
About 60 percent of the new firm's sales will be in plastic additives, Dunnell said. The combined firm will be North America's largest plastics additives maker and third-largest specialty chemicals firm, said company officials.
Andrew Reynolds, research director with Applied Market Information LLC consulting firm in Wyomissing, Pa., said he does not think the deal will have a major impact on plastic compounders that do business with both firms.
``This deal doesn't seem to be so much about market consolidation within product ranges as it [is about] two companies that don't necessarily knock on the same doors,'' Reynolds said. ``I think compounders are used to this kind of rationalization in the industry. And there's still a wide variety of companies supplying the additives market.''
Crompton spokeswoman Dunnell said the Great Lakes deal will not have any impact on the potential sale of Crompton's Davis-Standard machinery division, which makes extruders, film equipment and blow molding machines. In a mid-2004 conference call, Wood said Davis-Standard ``doesn't fit long-term'' with Crompton.