Cytec completes acquisition of UCB's surface specialties business; redesigns organizational structure

Citation

(2005), "Cytec completes acquisition of UCB's surface specialties business; redesigns organizational structure", Anti-Corrosion Methods and Materials, Vol. 52 No. 4. https://doi.org/10.1108/acmm.2005.12852dab.012

Cytec completes acquisition of UCB's surface specialties business; redesigns organizational structure

Cytec completes acquisition of UCB's surface specialties business; redesigns organizational structure

Cytec Industries Inc., West Paterson, NJ, has completed its previously announced acquisition of UCB's surface specialties business. The transaction is valued at $1.797 billion of which euro 1.140 billion ($1.505 billion at 1.32$/euro) was paid in cash and the balance was paid in 5,772,857 shares of Cytec common stock ($292 million at $50.55 per Cytec share). In addition, there is contingent consideration up to a maximum of euro 50 million, of which euro 20 million was paid up front with the balance payable in 2006. The contingent consideration is earned on a pro rata basis pending the achievement of certain operating results by surface specialties in 2005.

UCB now owns approximately 12.5 per cent of the outstanding shares of Cytec, and has entered into a stockholders agreement that provides for UCB to reduce its stake within 5 years, and contains other customary terms and conditions. The cash portion of the acquisition cost was financed utilizing the credit facilities recently announced by the company.

In conjunction with this transaction, Cytec has agreed to divest Surface Specialties' amino resin product line during 2005, and to use the proceeds to reduce debt. Sales of surface specialties' amino resin product line in 2004 were approximately euro 123 million.

David Lilley, Chairman, President and Chief Executive Officer, said, “With this acquisition, Cytec becomes one of the world's leading suppliers of specialty chemicals to the coatings industry, and creates a combined Cytec entity of approximately $3.0 billion based on 2004 pro forma revenues excluding Surface Specialties' amino resin product line. This transaction complements Cytec's existing product lines by significantly increasing Cytec's product offering to the coatings industry, including the general industrial, automotive, architectural, plastics, graphic arts and wood end markets. This acquisition provides us with a sustainable growth platform with potentially above-average growth rates, and expands our technology base and our geographic capabilities.”

Lilley also announced a redesigned organizational structure. “Cytec will operate the acquired Surface Specialties business as a separate segment, and will integrate the existing Coating and Performance Chemicals product lines into this new segment, which will be headquartered in Brussels, Belgium. Ben Van Assche, formerly director-general of Surface Specialties, has been named president of Cytec Surface Specialties and will be elected an officer of Cytec and a member of our executive committee.”

The remaining two product lines in Cytec's performance products segment, polymer additives and specialty additives, will be combined with the water and industrial process segment. This specialty chemicals segment, which includes the water treatment, mining, and phosphine chemicals product lines and now the polymer additives and specialty additives product lines, will be renamed Cytec Performance Specialties, and will continue to be headquartered at Cytec's corporate headquarters in West Paterson, NJ, and led by Shane Fleming, President.