Issue Date: March 11, 2013 | Web Date: March 8, 2013
Bad Deal Between Chemical Firms
Klesch, a Swiss industrial products firm, is accusing the chemical maker Arkema of misrepresenting the financial accounts of its polyvinyl chloride business, which Klesch took over from the French company eight months ago. Klesch is seeking total damages of $400 million.
Klesch alleges that there are “significant gaps” in the financial information presented by Arkema’s management before completion of the deal and the business’s current financial results. “After several months of fruitless negotiation,” Klesch says, it has no option but to seek formal arbitration. Klesch says its problem is only with the PVC business and not an associated vinyl siding and compounds business that it acquired at the same time.
Arkema rejects Klesch’s accusations, saying it is “deeply shocked by these serious and false allegations and wishes to refute them most categorically.” Prior to the sale of the two businesses, Arkema says, it provided Klesch with a full financial disclosure so that the Swiss firm could conduct in-depth due diligence. Arkema also disputes Klesch’s assertion that the two firms have been discussing the misrepresentation issue.
For Arkema, sale of the PVC and siding businesses was a major step in its plan to focus completely on specialty chemicals. To rid itself of the loss-making operations, Arkema paid Klesch $135 million and took other financial charges. At the time of the takeover, the two businesses employed 1,780 people and had annual sales of about $1.3 billion.
- Chemical & Engineering News
- ISSN 0009-2347
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