With the finalization of the Crompton Corporation and Great Lakes Chemical Corporation all-stock merger today, the combined company becomes Chemtura Corporation, the fourth-largest publicly traded U.S. specialty chemicals company and the world’s largest plastics additives company. Chemtura, with combined pro forma 2004 revenues of $3.7 billion and a market capitalization of approximately $3.3 billion, will begin trading under the New York Stock Exchange ticker symbol CEM on July 5.
“Chemtura is a unique new company with a portfolio of global businesses that have achieved leading positions in high-value market niches,” said Chemtura Chairman, President and Chief Executive Officer Robert L. Wood. Chemtura holds leading positions in several high-value specialty chemical niche businesses, including plastics additives, petroleum additives, flame retardants and pool chemicals. Additionally, the company has strong positions in castable urethanes and crop protection chemicals.
“Since we announced our agreement to merge March 9, integration teams have been working intensely to create a new company with a new organizational design and new work processes. We are building a world-class organization and adopting best business practices in everything we do. As we said in March, this is a transformational merger. Our vision is to create the world’s best specialty chemicals company, not simply to add companies together.
“As of today, while we still have a number of jobs to fill, our organization is almost completely formed and employees at every level are poised to take the actions needed to deliver strong financial results. Our integration work will create immediate value through the recognition of significant synergies throughout the company. As a result, we are increasing our synergy estimate to $150 million from the original target of $90 million to $100 million,” Wood said.
Cumulative synergy savings are expected to total $10 million in 2005; $100 million in 2006; and $150 million in 2007. Approximately 30% of the total synergies is expected to come from organizational redesign; 60% from savings in supply chain operations, and the remainder from other areas. By combining workforces, streamlining work processes and utilizing more efficient systems, the company expects to reduce its total number of employees by about 600 worldwide, or approximately 8 percent, over the next year from its current level of approximately 7,300 people. In addition, Chemtura has expanded its geographic footprint and access to key buyers globally and is putting into place cross-selling and captive-sourcing opportunities across its extended portfolio.
The company expects to incur one-time cash expenditures totaling $125 million to $135 million relating to change in control agreements, and $20 to $25 million related to severance and related expenditures. Chemtura also will incur one-time cash expenditures of $50 million to $55 million related to the closing of the transaction. The company will have approximately $20 million in one-time cash expenditures to support the integration of both companies and approximately $6 million of charges for the write-off of unamortized fees relating to bank facilities that are being replaced.
In addition to Chairman Wood, the board of directors has five directors from each predecessor company, for a total of 11 directors. Chemtura expects to maintain a cash dividend level of $.05 per quarter.
The new company’s strategy is to develop a portfolio of global businesses with leading positions in high-value market niches. CHEMTURA holds leading positions in high-value specialty chemical niche businesses, including plastics additives, petroleum additives, flame retardants and pool chemicals. Additionally, the company has strong positions in castable urethanes and crop protection chemicals.