COVINGTON, KY/WILMINGTON, DE – In another deal in the chemicals industry in as many days, Ashland Inc. has announced it will buy Hercules Inc. The deal is valued at approximately $3.3 billion, or $23.01 per Hercules share, and is expected to close by the end of calendar 2008.

 

Ashland is a manufacturer of specialty chemicals, a distributor of chemicals and plastics, and a provider of automotive lubricants, car-care products and quick-lube services. Hercules produces specialty additives and ingredients that modify the physical properties of water-based systems and is a supplier of specialty chemicals to the pulp and paper industry. Hercules’ Aqualon business produces additives used across a wide range of industries, including paint.

 

Ashland Chairman and Chief Executive Officer James J. O’Brien said, “The acquisition of Hercules fulfills our objective to become a leading specialty chemicals company. It creates a defined core for Ashland composed of three specialty chemical businesses with strong market positions and promising global growth potential: specialty additives and ingredients, paper and water technologies, and specialty resins. In addition, we expect our financial profile to be enhanced significantly through reduced earnings volatility, improved profitability and stronger cash flow generation.”

 

O’Brien continued, “We are extremely impressed with the quality of the Hercules people and we look forward to welcoming them into the Ashland family. Our companies share a common desire to live up to our own high expectations, and those of our customers, shareholders and the communities in which we operate. We are also very pleased that John Panichella, President of Hercules’ Aqualon Group, and Paul Raymond, President of Hercules’ Paper Technologies and Ventures Group, have agreed to join Ashland after the close of the transaction, reporting directly to me. In addition, we expect to maintain a significant presence in Wilmington, DE, where Hercules is headquartered.”

 

Ashland expects to realize annualized run-rate cost savings of at least $50 million by the third year following the transaction’s close by eliminating redundancies and capturing operational efficiencies.