August 5, 2008
Ashland Inc. To Acquire Hercules Inc. For 1.22 Times Revenue
The Deal; Ashland Inc. has agreed to purchase Hercules Inc. for about $2.6 billion in a cash and stock transaction. Under the terms of the deal, Ashland will pay S 18.60 in cash plus 0.093 shares of its stock in exchange for each share of Hercules. Based on recent closing prices, the deal values Hercules at $23.01 per share. Ashland will also assume certain Hercules debt, bringing the total deal value to around $3.3 billion. The companies expect the deal to close by the end of 2008. Discussion: Hercules Inc. produces a range of chemical products. Company products include wood and gum rosin resins for adhesives and construction materials, water-treatment and functional performance chemicals used in the pulp and paper industry, and thickeners for water-based items such as latex paints, printing inks, and oral hygiene products.
Ashland Inc. is a chemicals company that operates in four business segments. The company makes specialty resins, polymers, and adhesives, provides chemical and non-chemical products for water treatment, buys and distributes chemicals and plastics, and produces and markets Valvoline brand motor oil.
The acquisition of Hercules will give Ashland a major presence in the pulp and paper sector of the water treatment market. The deal increases Ashland's portfolio of of specialty adhesives and ingredients.
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