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Business

Business Concentrates

January 31, 2005 | A version of this story appeared in Volume 83, Issue 5

Investors shun Celanese stock offer

The much-anticipated initial public offering of Celanese stock earlier this month was a bit of a blow to Blackstone Group, which had taken the company private just 10 months earlier. The offering initially was priced at $19 to $21 per share, but the firm dropped the offering to just $16 per share after investors complained about the higher price. On the first day of trading, the stock achieved a high of $16.20 but closed at $16.02 per share. Thus, instead of reaping $1 billion for the 50 million shares offered, Blackstone got about $800 million. The offering was what is termed a "quick flip," because Blackstone turned the investment around in just months instead of holding it for the three to five years that investment banking firms usually hold a company. Analysts say investors thought Celanese was overvalued and balked at what was essentially a $1 billion dividend payout to Blackstone rather than fundraising intended to pay down the chemical company's high debt.

DuPont Dow settles suits

DuPont Dow Elastomers has reached a plea agreement with the Department of Justice that includes an $84 million fine resolving all criminal charges stemming from an investigation into the fixing of polychloroprene rubber prices. Separately, the elastomers joint venture has agreed to settle a federal class-action antitrust lawsuit over ethylene propylene diene, another synthetic rubber, for an undisclosed sum. DuPont Dow settled a class-action suit related to polychloroprene in June 2004, agreeing to pay customers $36 million. DuPont and Dow finalized plans to break up the elastomers joint venture earlier this month.

Solutia exiting acrylic fibers

Solutia will close its Decatur, Ala., acrylic fibers plant by the end of April. The site employs most of the acrylic business' 250 employees and 200 contractors. "The business has simply been unable to compete as fiber and textile manufacturing has moved outside the U.S.," says John F. Saucier, president of Solutia's nylon business. The company says the business has been losing up to $2 million per month for about five years. The company will continue to make nylon intermediates in Decatur. In 2002, Sterling Chemicals sold its Pensacola, Fla., acrylic fibers plant--the only other such plant in the U.S.--to management for a nominal price.

RED ROVER
[+]Enlarge
Credit: NASA PHOTO
DuPont materials propel Mars exploration rover, Spirit.
Credit: NASA PHOTO
DuPont materials propel Mars exploration rover, Spirit.

Rovers, DuPont still on the go

DuPont says a plethora of its materials has enabled the Mars exploration rovers, Spirit and Opportunity, to exceed their original expected life span of three months. One year after landing, the NASA-launched rovers continue to send back clear images of the martian surface. Each of the rovers contains almost 70 yards of flexible circuits made of DuPont thin laminates and composites. Other DuPont materials include metallized polyimide film for thermal shielding of heat-sensitive components and polyimide strip heaters to maintain operations when martian temperatures go as low as –120 ºC.

Degussa slates China projects

Degussa has signed with Chinese firm Shandong Cathay Lineng Biotechnology Co. to establish a joint venture for the feed additive l-lysine. The venture--held 51% by Degussa and 49% by Cathay--will build a 40,000-metric-ton-per-year plant this year at Cathay's site in Jining, Shandong province, north of Shanghai. Separately, Degussa is expanding its carbon black capacity in China with a fourth production line at its plant in Qingdao, Shandong province. "Demand is booming for high-quality grades of carbon black" for the tire and rubber industries, says Robert Wissner, head of Degussa's fillers and pigments business.

Danisco to buy Genencor

Danisco plans to take over Genencor International in a two-part deal that values the enzyme maker at more than $1 billion. First, Danisco has entered into an agreement to purchase Eastman Chemical's 42% interest in Genencor for $419 million. Danisco already owns 42%. Separately, with approval from Genencor, Danisco says it will make a tender offer for all publicly held Genencor shares for $19.25 per share, or about $173 million. Danisco CEO Alf Duch-Pedersen says, "Our acquisition of Genencor will enhance Danisco's strong capabilities in enzymes for food and feed," as well as broaden Danisco's involvement in the industrial enzyme business. The Danish firm says it expects to complete both transactions by the end of May.

Pfizer plans Angiosyn buy

Pfizer plans to buy Angiosyn, a company seeking to develop a compound to address uncontrolled blood vessel growth. If the deal is completed, Angiosyn's stockholders could receive payments of up to $527 million plus future sales royalties. Full payment is contingent upon commercially developing an ophthalmic indication as well as another, undisclosed, therapeutic area. Angiosyn, formed in 2003 by Scripps Research Institute along with venture-capital firm Alta Partners, focuses on ophthalmic diseases such as macular degeneration. Pfizer has also signed an R&D agreement with Rigel Pharmaceuticals to work on novel products to treat asthma and other respiratory diseases.

Dow swaps IP for nanotech investment

Dow Chemical will transfer all its intellectual property--196 patents--in dendrimer technology to Dendritic NanoTechnologies in exchange for an ownership stake in the firm. DNT offers more than 200 variations of dendrimers to pharmaceutical, biotech, and diagnostics companies. It was founded in 2003 on technology discovered in 1979 by Donald A. Tomalia, then a Dow scientist. In a related move, Starpharma will raise its investment in DNT above its current 42% level to gain exclusive rights for polyvalent, dendrimer-based pharmaceutical applications. In January 2004, Starpharma began human clinical testing of VivaGel, a dendrimer-based topical microbiocide for preventing HIV transmission.

Schering-Plough nabs NeoGenesis

Schering-Plough is acquiring the assets of NeoGenesis Pharmaceuticals for an undisclosed amount. NeoGenesis has developed a high-throughput, microvolume, small-molecule screening technology. The screening involves affinity selection: identifying drug candidates that modulate a target either through an active site, allosteric sites, or a novel exosite. The two firms have been collaborating since 1999.

Chlorine spill cost estimated

Norfolk Southern expects expenses from the train derailment and chlorine spill in Graniteville, S.C., earlier this month to be $30 million to $40 million. The amount does not include any penalties that governmental authorities may impose on the railroad as a result of the accident, which claimed nine lives and forced the evacuation of thousands near the spill site. One law firm, Motley Rice, has filed a class-action lawsuit to recover property damage on behalf of local residents. In addition to Norfolk Southern, the suit names as defendants Union Tank Car, the maker of the car whose contents spilled, and Olin, the chlorine producer.

Price climb continues

U.S. chemical prices maintained their upward momentum at the end of the year. The December producer price index for all chemicals was 183.6 (1982 = 100), up 0.7% from November and 12.5% ahead of December the year before, according to data from the Labor Department. Meanwhile, the index for industrial chemicals eased somewhat, falling 0.3% from November to 177.3. However, the industrial chemical index was still up 23.9% from December 2003. For the full year, the average index for all chemicals was 174.2, up 7.7% from 2003. The average index for industrial chemicals increased 14.6% to 162.5.

Chile studies ethylene plant

Chilean national oil company ENAP and local polypropylene maker Petroquim are studying an ethylene cracker project in Talcahuano, Chile. The complex would have capacity for 450,000 metric tons per year of ethylene and 230,000 metric tons of propylene and would also make polypropylene and linear low-density polyethylene. It would be located near an ENAP refinery and an existing Petroquim polypropylene unit. Construction on the $800 million project would begin in the first quarter of 2007 and be completed in the fourth quarter of 2009.

Protein Design buys drug seller

Protein Design Labs, a producer of humanized monoclonal antibodies, has agreed to acquire ESP Pharma, a privately held drug company, for $475 million in stock and cash. The deal will give PDL a 75-person salesforce and marketed products to complement its pipeline of clinical stage compounds, "With this transaction, we have filled the void in one major functional expertise PDL lacked, namely commercialization capabilities," PDL CEO Mark McDade says. ESP, launched in 2002 with the purchase of four Wyeth drugs, had 2004 sales of more than $90 million.

Pollution spurs Rhodia suit against Sanofi

Rhodia is suing Sanofi-Aventis to seek compensation for pollution clean-up liabilities. In dispute are a chlor-alkali plant in Cubatao, Brazil, and a phosphate mine in Silver Bow, Mont. The Cubatao plant was closed on Brazilian court order in 1993 because of serious pollution; the Silver Bow site was phased out at the end of 1995. The sites were owned by Rhodia's predecessor company, Rhône-Poulenc, which later merged with Hoechst to form Aventis; Aventis was subsequently acquired by Sanofi. Sanofi says the two reached a settlement in 2003 and that it "considers that the matter is closed."

Degussa switches MTBE production

Degussa will convert a Marl, Germany, plant that produces the fuel oxygenate methyl tert-butyl ether to make ethyl tert-butyl ether based on bioethanol. The conversion is in response to a 2003 European Union directive stipulating that biofuels should rise to 5.75% of fuel sales by 2010. The ETBE plant will have a capacity of about 250,000 metric tons per year.

BUSINESS ROUNDUP

Shin-Etsu has picked Iberville Parish, La., as the site of a $1 billion integrated polyvinyl chloride plant that it earlier announced for the U.S. Gulf Coast. Separately, the firm says it will expand its PVC plant in Pernis, the Netherlands, by 30% to 450,000 metric tons per year.

IP2IPO, a British technology-transfer company, has bought out the remaining shares of Techtran Group, a similar group established by the University of Leeds, in England. IP2IPO bought a 20% stake in Techtran last July. In total, the acquisition values Techtran at roughly $38 million.

ExxonMobil Chemical will boost capacity at its 800,000-metric-ton-per-year Singapore ethylene cracker by more than 12%. The company expects to complete the work at the end of next year.

Polietilenos União, part of Brazilian conglomerate Unipar, is licensing Chevron Phillips' slurry-loop technology for a 200,000-metric-ton-per-year polyethylene reactor in Santo Andre, São Paulo, Brazil. The new line is expected to be completed in 2007.

Dow Chemical and the Michigan Department of Environmental Quality have reached an agreement on the cleanup of dioxin contamination near rivers around Dow's Midland, Mich., site. Initial work will address property contaminated by flooding in March 2004.

 

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