Business Concentrates

Schulman, Barington in pact that will avoid proxy battle

A. Schulman, an Akron, Ohio-based polymer compounder, and a group of investors led by Barington Capital have reached an agreement that forestalls a proxy fight to place three Barington nominees on Schulman's board of directors (C&EN, Oct. 17, page 13). Under the agreement, Barington has withdrawn its notice of intent to nominate people for election as directors at Schulman's 2005 annual meeting and has agreed to abide by standstill provisions until Schulman's 2007 annual meeting. The agreement also provides that Schulman will self-tender 8.75 million of its shares for no less than $20 per share. If the tender offer is not completed by April 30, 2006, the standstill agreement will end. In addition, Schulman will increase the size of its board from 10 to 12 directors, one of whom will be Barington CEO James A. Mitarotonda. Another new director, acceptable to both parties, will also be appointed to the board. Furthermore, the two firms have agreed to implement a number of corporate governance measures including establishing a lead independent director. Last, the company has retained Credit Suisse First Boston to act as financial adviser to the board and to provide regular updates concerning expressions of interest by third parties.

Degussa to sell metallurgy unit

Degussa has inked a deal to sell its last remaining metallurgical chemical business, ESM Group, to Platinum Equity, a financial investment firm based in Los Angeles, for $55 million. ESM sells metal desulfurization products and services to North American steelmakers. The business has annual sales of $150 million and employs 275 people. Last year, Degussa sold its foundry, steel, and continuous-casting powder business.

DuPont seeks to raise value

As part of a plan to increase shareholder value, DuPont has announced a $5 billion stock repurchase program. The company has entered into a $3 billion accelerated share repurchase agreement with Goldman Sachs under which it will buy more than 75.7 million shares of its common stock from the brokerage on Oct. 27 for $36.62 per share. DuPont will then execute the remaining $2 billion repurchase beginning in mid-2006. The company's plan also includes actions to ensure that every business can at least earn the cost of capital over a business cycle, realize productivity enhancement measures, accelerate new-product introduction efforts, and focus on biobased materials. The plan will be detailed at a Nov. 7 investor presentation. DuPont last week also reported third-quarter earnings, excluding unusual items, of $333 million, up 31.6% from the same period in 2004. Sales rose 2.3% to $5.87 billion.

Wellman sets PET restart

Wellman plans to restart one of two polyethylene terephthalate (PET) resin units at its Pearl River facility in Mississippi this week. The second unit is set for restart at the end of November. Each has annual capacity of 260 million lb and has been offline since Hurricane Katrina came through at the end of August. Damage to inventory, along with costs to clean up and repair the facility, will likely come to between $22 million and $25 million, the firm says. Insurance reimbursements will cover these hurricane-related costs as well as lost profits in excess of $20 million.

AMRI in deal with Bristol

Albany Molecular Research Inc. has granted Bristol-Myers Squibb an exclusive license to develop multiple potential amine neurotransmitter reuptake inhibitors developed by AMRI. AMRI will receive an up-front payment of $8 million as well as $10 million in research funding over three years. The firm will be eligible for subsequent royalties totaling as much as $88 million. It will also potentially provide chemistry services, including manufacturing, to BMS.

Dow Corning expands lab in Shanghai

Dow Corning has expanded its applications center in Shanghai, doubling its ability to serve customers in Asia. Located in the Songjiang Industrial Zone, the expanded center has another 2,500 m² of space for laboratories and equipment. As part of the expansion, the company says it will hire several dozen additional chemists, chemical engineers, and analytical scientists over the next three years. Ian Thackwray, president of Dow Corning Asia, says the firm also plans to collaborate with local academic societies and universities to develop new product applications and technologies.

BASF readies wood enhancer

BASF is launching a new cross-linking technology aimed at replacing scarce tropical hardwoods with woods such as pine and beech that are the products of sustainable forestry. BASF Group Vice President Hans-Jrgen Degen says the company's researchers have adapted cross-linking agents used in easy-care cotton textiles to the cellulose fibers in wood. He says the technology, called Belmadur, results in woods that are harder, more durable, and more dimensionally stable than even tropical woods. Belmadur, which was tested for three years with scientists from Germany's University of Gttingen, will be marketed to companies in the wood industry.

Iran to use Basell route for PE plants

Basell's Spherilene high-density/linear low-density polyethylene technology is being licensed for two plants being built by Iran National Petrochemical Co. Both of the plants will have annual capacity for 300,000 metric tons, are slated to open in 2008, and will be part of NPC's planned 11th Olefin Project. One will be built by Lorestan Petrochemical in Khoramabad, the other by Mahabad Petrochemical in Mahabad. Also part of the 11th Olefin Project will be high-density and low-density polyethylene plants that will use Basell's Hostalen and Lupotech technologies, respectively. Basell has signed 15 licenses in Iran.

Air Products expands NF₃

Air Products & Chemicals has completed a 50% expansion of its nitrogen trifluoride capacity in Hometown, Pa. The company says the project, which involved the addition of a third independent NF₃ plant, raises capacity at the site to more than 2,000 metric tons per year and solidifies its position as the world's largest producer of the chemical. NF₃ is used as a chamber-cleaning gas in the manufacture of semiconductors and flat-panel displays.

Investors buy Acordis' Enka

European fiber maker Acordis has sold its Enka subsidiary to International Chemical Investors for an undisclosed sum. Enka calls itself the world's leading maker of premium rayon filament for textile applications. It has more than 1,000 employees at facilities in Germany and Poland and annual sales of some $120 million. International Chemical Investors is a newly formed investment group that recently acquired six chemical businesses from Germany's RAG Group. Acordis is being sold off piecemeal by its main owner, CVC Capital partners.

Serono strikes deal with Rigel

Rigel Pharmaceuticals and Serono have announced a licensing agreement under which Serono gains exclusive rights to develop and commercialize small-molecule drug candidates from Rigel's Aurora kinase inhibitor program. Under the agreement, Rigel will receive initial payments totaling $25 million, including a $15 million purchase of Rigel stock. With milestone payments, Rigel could receive up to $160 million plus royalties. Rigel's kinase inhibitor program includes R763, a cancer treatment that has shown potential in inhibiting proliferation and triggering apoptosis in cervix, colon, lung, pancreas, and prostate tumor cells. Rigel expects to file an Investigational New Drug Application for R763 in 2005.

Bayer and J&J in drug pact

Bayer and Johnson & Johnson's Ortho-McNeil Pharmaceutical unit have agreed to jointly develop and market Bayer's BAY 59–7939 (Factor Xa inhibitor) for the prevention and treatment of thrombosis. The drug is currently undergoing Phase II clinical trials. Bayer says Phase III clinical trials of its effectiveness in the prevention of venous thromboembolism will be initiated soon. Ortho-McNeil will share development costs and will make about $290 million in up-front payments and payments based on hitting milestones. Following the launch in the U.S., Ortho-McNeil will pay royalties of up to 30%, depending on sales thresholds.

Exports soar, as do imports

U.S. chemical trade grew in August, with growth of exports slightly higher than that of imports, according to the latest data from the Commerce Department. Nevertheless, the trade deficit still rose from July. The government data show the value of chemical exports rising 8.3% from July and 9.6% from August of last year to $10.3 billion. Meanwhile, imports increased 8.1% from the prior month and 10.3% from the comparable month in 2004 to $10.7 billion. Thus, the trade deficit was $413 million in August, compared with $402 million in July and $327 million in the same month a year ago. For the first eight months of this year, exports rose 12.7% from the same period in 2004 to $80.3 billion, while imports increased 11.9% to $84.4 billion. The deficit for the period declined to $4.18 billion from $4.21 billion a year earlier.

BUSINESS ROUNDUP

Discovery Partners International has struck a deal with Japan's Ono Pharmaceutical under which the two firms will collaborate on multiple hit-to-lead and lead optimization projects.

Akzo Nobel has acquired a 60% interest in Egypt's leading powder coatings manufacturer, Coatech For Chemical Industries SAE. Coatech was established in 1992 and employs 130 people.

Diversa says it will be challenged to meet its previous revenue, net loss, and cash usage guidance for 2005. The biomaterials company, which recently parted ways with its CEO, says it is reviewing operations in order to focus on products with the greatest potential.

Affymetrix has completed the acquisition of ParAllele BioScience, a provider of genotyping technologies, for about $121 million in stock and cash. ParAllele was founded in 2001 by a team of scientists from Stanford Genome Technology Center.

Adhesives Research is re- structuring into four operating divisions in response to what it describes as rapid growth. Each division will have dedicated quality, sales, manufacturing, and technical resources.

Sumitomo Chemical and Cambridge Display Technology have picked Sumation as the name of their Tokyo-based organic light-emitting-diode materials and ink joint venture. Sumitomo will conduct manufacturing for the venture in Osaka, Japan.

NL Industries, Sherwin-Williams, and other former manufacturers of lead paint go on trial again in Rhode Island, this time with private firms aiding the state attorney general's effort to recover the cost of remediating inner-city housing. The first trial ended with a hung jury in 2002.