Business Concentrates

Solutia, Geo move on bankruptcies

The U.S. Bankruptcy Court for the Southern District of New York will hold hearings next week on Solutia's agreement to sell its Axio contract clinical research unit for $200,000, plus a percentage of future profits, to an entity headed by one of Axio's former owners. Solutia needs court approval to proceed with the sale of Axio, which it bought in 2002. Solutia had hired investment banking firm Rothschild in July to help sell its pharmaceutical services division, excluding Axio. Separately, the court ordered Solutia to restore all medical benefits to retirees. Changes in benefits would have saved Solutia $5 million annually. Meanwhile, Geo Specialty Chemicals, which filed for bankruptcy reorganization seven months ago, has submitted a plan that should allow it to emerge from court supervision by year-end. Creditors cooperated with the company to file the plan with the U.S. Bankruptcy Court for the District of New Jersey.

BP buying out Solvay in pact

Solvay is exercising its option to sell its interest in two polyethylene joint ventures to BP. Pending regulatory clearance, BP will acquire Solvay's 50% interest in their European polyethylene joint venture, which has about 1.6 million metric tons per year of capacity at five sites. BP will also get Solvay's 51% stake in their U.S. partnership, composed of 1 million metric tons of capacity at two sites. The joint ventures were formed in 2001 in a series of transactions that saw Solvay sell its European polypropylene business to BP and Solvay buy BP's engineering polymers unit. Solvay says it will use the proceeds from the sale to pay down some $1 billion in debt related to its 2001 purchase of fluoropolymers maker Ausimont. BP will include the business in its planned olefins and derivatives spin-off.

Merck takes new Vioxx hit

Merck's stock dropped approximately 10% on Monday, Nov. 1, following publication of an article on the company in the Wall Street Journal. The article cited internal Merck e-mail messages and other documentation suggesting that executives with the drug company had "fought forcefully for years" to keep safety concerns regarding its top-selling painkiller, Vioxx, from becoming public. Merck pulled Vioxx off the market in September because of concerns regarding heart attack and stroke risks. A press release from Merck claims that the article cited the documents out of context and that the company's response to safety concerns was "responsible and appropriate." Merck's stock has plummeted nearly 38% since Vioxx was recalled.

Honeywell exits a fiber business

Honeywell has agreed to sell its performance fibers business to Sun Capital Partners for an undisclosed sum. The business, which had sales of $368 million in 2003, supplies high-tenacity polyester fiber for applications such as tires, broad-woven fabrics, and rope. The deal does not include Honeywell's Spectra polyethylene fiber unit or its nylon fibers business, some of which it acquired in a swap with BASF last year. However, Honeywell calls nylon "noncore" and is weighing its options for the business.

Degussa opens catalyst center

Degussa has launched a catalysis competence center in Hanau-Wolfgang, Germany, that employs 85 workers in 12 labs and one pilot plant. Alfred Oberholz, the firm's board member responsible for R&D, noted at an inauguration ceremony that Degussa is the only firm with equal expertise in the three disciplines of homogeneous and heterogeneous catalysis and biocatalysis. The firm says it has invested some $70 million in catalysis since 2001, including $12 million in the new center.

Lonza hikes cell capacity

Lonza plans to add a fourth 20,000-L mammalian cell culture bioreactor at its biologics plant in Portsmouth, N.H. Eli Lilly, one of Lonza's biggest customers, recently canceled plans to build a plant to produce the bulk active ingredient for its sepsis treatment Xigris (drotrecogin alfa), a recombinant form of human activated protein C, after determining that Lonza has sufficient capacity for the foreseeable future. The new capacity in Portsmouth is due onstream in 2006.

Dow's Derakane goes to Ashland

Ashland is buying Dow Chemical's Derakane epoxy vinyl ester business for $92 million. The business, which supplies matrix resins for composites, has annual sales of about $70 million. For Ashland, the acquisition complements its line of unsaturated polyester resins. "In today's environment," Dow says, "continued success ... would involve investing in polyester, which lies outside of our established core capabilities."

CP Chem plans PPS facility

Chevron Phillips Chemical plans to build a 22 million-lb-per-year polyphenylene sulfide plant to complement existing plants in Texas and Belgium. A location for the engineering polymer facility, expected to go onstream in early 2007, has not been selected. Fortron Industries, a joint venture between Ticona and Kureha Chemicals, is also planning a PPS plant at a yet-to-be-determined site, in addition to smaller expansions at its Wilmington, N.C., location.

DuPont acquires methylamines

DuPont has acquired the methylamines and dimethylformamide business of Canada's Chinook Group. DuPont plans to integrate the business into its existing methylamines operation in Belle, W.Va. Separately, DuPont has collaborated with engineering firm Kellogg, Brown & Root to license DuPont's aniline technology to Fangyuan Chemical Industry Development. The Chinese firm plans to produce 450 metric tons per day of aniline in Lucheng, Shanxi province, China.

Rhodia sells membranes unit

Rhodia is selling its membrane filtration technology unit, Orelis, to Novasep, the French chromatography equipment firm that is merging with the fine chemicals maker Dynamic Synthesis (C&EN, Oct. 25, page 16). Orelis, which generated sales of $26 million in 2003, manufactures organic and inorganic membranes for filtration systems.

GenCorp puts fine chemicals on the block

GenCorp is putting its Aerojet Fine Chemicals business up for sale in an effort to focus on its core defense and real estate businesses. Aerojet, a contract manufacturer of active pharmaceutical ingredients with 2003 sales of $58 million, specializes in high-containment processes, hazardous and energetic chemistry, and chiral separations. The business had operating losses of $14 million in each of 2000 and 2001, but it returned to profitability in 2002 following a restructuring and downsizing regime under its newly appointed president, Joseph Carleone.

Germany's Merck may exit electronics

Merck KGaA is in talks to sell its electronic chemicals business, a supplier of high-purity chemicals used in semiconductor manufacture. The business employs around 550 people at sites in Europe and Asia and had sales in the first nine months of the year of about $195 million. Merck would retain its business in liquid crystals for flat-screen displays as well as chemical businesses in pigments and life sciences. Arch Chemicals is in the process of selling much of its electronic chemicals business, and Clariant exited the field earlier this year (C&EN, Nov. 1, page 8).

Chemical demand slips

U.S. chemical shipments fell in September from the previous month, according to seasonally adjusted data from the Commerce Department, but were still well ahead of the comparable month in 2003. The value of chemical shipments fell 1.3% from August, while rising 7.8% from September of last year. Demand for chemicals, excluding pharmaceuticals, declined just 0.2% from the previous month, but soared 11.4% from September 2003. Meanwhile, inventories for all chemicals were down 0.3% from August and up 6.9% from September 2003, and, excluding pharmaceuticals, inventories rose 0.1% and 4.2%, respectively. The inventories-to-shipments ratio for all chemicals increased to 1.33 in September from 1.32 in August. It was 1.34 in September 2003.

Plexxikon, Wyeth link

Wyeth will be paying Plexxikon $22 million in up-front license fees and research funding as part of a collaborative effort involving diabetes and other metabolic disorders such as obesity. Plexxikon may also earn further milestone and royalty payments in the development of PLX204, its lead compound, as well as other small molecules targeting the PPAR, or peroxisome proliferator-activated receptor, family. According to the companies, PLX204 has potential as a once-daily pill for the treatment of type 2 diabetes. Plexxikon says PPAR modulators are a novel chemical class that it has been exploring using structural analysis of protein target active sites to guide lead chemistry.

Roche opens China center

Roche has opened a medicinal chemistry R&D center in Shanghai that will be staffed with 40 scientists. The center will mostly perform lead generation and optimization. It is located in Zhangjiang technology park, where the Swiss firm already has a plant, and is Roche's fifth R&D center worldwide. At the inauguration ceremony, Roche announced the construction of a second Shanghai plant, which will produce the cancer medicine Xeloda and the transplantation drug CellCept.

BUSINESS ROUNDUP

Roche and Pharmasset are partnering to develop nucleoside polymerase inhibitors for the treatment of chronic hepatitis C virus infections. Pharmasset could obtain a total of $300 million for PSI-6130, the lead compound under development.

NanoInk has licensed a family of patents from the University of Illinois that involves arrays of "active pens" for nanoscale lithography. The firm says the license will improve the flexibility and speed of its Dip Pen Nanolithography technology.

J. M. Huber's CP Kelco unit will double pectin production at its Limeira, Brazil, site by 2007. Kelco calls itself the world's leading pectin maker.

Terra Industries is mothballing its 225 million-gal-per-year methanol plant in Beaumont, Texas, by Dec. 1, a move that will result in the loss of 40 jobs. The action is at the request of Methanex, which has rights to output from the methanol plant through 2008.

Argonaut Technologies, a supplier of consumables and instruments to the pharmaceutical industry, has hired the investment banking firm SG Cowen to review strategic alternatives, including a possible sale, merger, partnership, or collaboration.

Cabot Corp. is closing its 45,000-metric-ton-per-year carbon black plant in Altona, Australia, by October 2005. The company says it will lose its source of raw materials around that time.

Huntsman Corp. is restructuring its European surfactants business as part of a cost-cutting program in its performance products division. The company will eliminate 320 positions over the next 15 months.