Flurry of Deals Signed As 2006 Nears End

As the end of 2006 approaches, several businesses that have been on the selling block are finally finding new owners.

Dow Chemical announced that it will acquire Bayer's Wolff Walsrode business, a $400 million-per-year maker of cellulose derivatives, for an undisclosed sum. Bayer said in March that it wanted to sell two subsidiaries, Walsrode and H. C. Starck, to help pay for the acquisition of Schering. Bayer announced the sale of Starck to two private equity firms in November.

Romeo Kreinberg, Dow's executive vice president for performance plastics and chemicals, says Walsrode will be joined with Dow's existing water-soluble polymers operation to create a $1 billion-per-year business. Walsrode focuses on hydroxyethylmethylcellulose, carboxymethylcellulose, and nitrocellulose, whereas Dow is a leader in hydroxypropylmethylcellulose, hydroxyethylcellulose, and other water-soluble polymers.

Meanwhile, Solutia has agreed to purchase Akzo Nobel's 50% stake in the two companies' Flexsys rubber chemicals joint venture. With sales last year of about $600 million, Flexsys produces additives that cure and protect rubber belts, hoses, seals, and other products.

Solutia, which is in bankruptcy, says it has received a commitment for $1.075 billion in financing that will help it buy the rest of Flexsys and make pension fund payments. Solutia and Akzo put Flexsys up for sale several years ago but withdrew it from the market when a buyer failed to emerge. They put it back on the block in 2005.

Finally, Degussa has sold its industrial chemicals business in Germany and Mexico to a management group for an undisclosed sum. The business, which manufactures sulfur, zinc, tin, and other inorganic chemicals, had sales last year of about $110 million.

The industrial business is one of the last noncore pieces to be sold by Degussa in a divestment program dating back to the company's formation as a specialty chemicals maker in 2001. A U.S. industrial chemicals business will be sold separately, Degussa says.