Crompton merges with Great Lakes

Crompton and Great Lakes Chemical are to merge, creating the third-largest publicly traded US specialty chemicals company.

The new company will have combined pro forma 2004 revenues of more than $4.1 billion and a market capitalization of nearly $3.2 billion.

It will hold leading positions in high-value specialty chemical niche businesses including plastics additives, petroleum additives, flame retardants and pool chemicals. Additionally, the combined company will maintain strong positions in castable urethanes and crop protection chemicals.

Under terms of the agreement, which has been unanimously supported by the boards of directors of both companies, Great Lakes shareholders will receive 2.2232 shares of Crompton common stock for each share of Great Lakes common stock they hold.

The transaction is expected to be tax-free to Great Lakes’ shareholders. The exchange ratio represents a 10.1% premium over Great Lakes’ closing share price on March 8, 2005, and equates to $29.92 per Great Lakes share. Based on the March 8 price, the transaction is valued at $1.8 billion, including approximately $250 million of Great Lakes net debt and minority interest.

The new company will be owned 51% by Crompton shareholders and 49% by Great Lakes shareholders on a fully diluted basis. Robert Wood, currently chairman, president and CEO of Crompton, will serve in those capacities for the combined company, which will be headquartered in Middlebury, CT.

The transaction, which is expected to close by mid-year, is subject to regulatory approvals, approval by shareholders of both companies and other customary conditions.

In 2004, Crompton had total revenue of approximately $2.55 billion and a net loss of $34.6 million. Great Lakes had total revenue of $1.6 billion and net income of $62.9 million in the same period. At December 31, 2004, Crompton and Great Lakes had 4,800 and 3,700 employees, respectively.