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Business

Chemtura Debuts

Crompton completes purchase of Great Lakes and moves to cut 600 jobs within a year

by Marc S. Reisch
July 11, 2005 | A version of this story appeared in Volume 83, Issue 28

ACQUISITION

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Credit: CROMPTON PHOTO
Chemtura CEO Wood on July 5 at the New York Stock Exchange, where Chemtura now trades under the symbol CEM.
Credit: CROMPTON PHOTO
Chemtura CEO Wood on July 5 at the New York Stock Exchange, where Chemtura now trades under the symbol CEM.

Crompton consummated the $2 billion acquisition of Great Lakes Chemical on July 1 to form the newly dubbed Chemtura. With total annual revenue of some $3.7 billion, Chemtura is the third largest publicly traded U.S. specialty chemicals company after Rohm and Haas and Engelhard.

Chemtura is a unique new company with a portfolio of global businesses that have achieved leading positions in high-value market niches, CEO Robert L. Wood says. The company holds strong positions in markets such as plastics and petroleum additives, castable urethane prepolymers, flame-retardants, and pool chemicals.

But the merger wont come without some cost to the combined firms workforce. To control costs, Chemtura will slash 600 jobs—equivalent to 8% of current employment of 7,300—over the next year. The company says it is undertaking the job cuts in an effort to streamline work processes and to utilize more efficient systems.

By 2006, Chemtura predicts that annual cost savings from the merger will be $150 million, up from the original estimate of $90 million to $100 million. Organization redesign will account for 30% of savings, supply-chain operations for 60%, and other areas for the balance of savings. As a result, Chemtura will take charges against earnings totaling nearly $240 million, including $20 million to $25 million for severance expenses, $125 million to $135 million for change-in-control agreements, and $50 million to $55 million for closing costs.

To get into fighting trim before the merger, Crompton sold its refined products business, along with 470 employees, to Sun Capital Partners in June, and placed its Davis Standard polymer equipment business, with 660 employees, in a joint venture with private equity firm Hamilton Robinson in April.

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