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Ashland completes $2.4 billion Hercules buyout
Friday November 14, 12:41 pm ET

Ashland closes on $2.4B buyout of Hercules; deal expected to save $120M a year by 2010

NEW YORK (AP) -- Chemicals maker Ashland Inc. has completed its $2.4 billion acquisition of paint thickener and paper chemicals manufacturer Hercules Inc.

As part of the deal, first struck in July, each Hercules share will be exchanged for $18.60 cash and 0.093 shares of Ashland common stock. Including $700 million in assumed debt, the transaction is valued at $3.1 billion.

The deal had been worth about $200 million more when first announced, but its value dropped in tandem with Ashland's share price.

"This transaction better positions Ashland to deliver more stable and predictable earnings, generate stronger cash flows and gain access to higher growth markets worldwide, most especially those in emerging economies," James J. O'Brien, Ashland's chairman and chief executive, said in a statement.

The maker of Valvoline lubricants will remain headquartered in Covington, Ky. Ashland said it expects to save about $120 million per year by the end of fiscal 2010 by eliminating redundancies and becoming more efficient. The combined company will feature five units, including water technologies, performance materials, aqualon functional ingredients, consumer markets and distribution.

Ashland said its expanded international presence will boost non-North American revenue to about 35 percent of total sales for the 12 months ended Sept. 30.

The cash portion of the transaction was funded through cash on hand and debt financing from Bank of America and Scotia Capital. Citigroup Global Markets Inc. acted as financial adviser to Ashland and Credit Suisse Securities (USA) LLC acted as financial adviser to Hercules.

In midday trading, shares of Ashland fell 16 cents to $17.74.

In the past 52 weeks shares of Ashland have traded between $16.73 and $58.58, and shares of Hercules have traded between $12.59 and $22.

Source: Associated Press

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