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Ashland to buy Hercules for $2.6 billion

July 11, 2008
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According to the Associated Press, chemical company Ashland Inc. said recently it will acquire Hercules Inc. in a cash-and-stock deal valued at $2.6 billion.

Ashland has agreed to pay Hercules shareholders $18.60 per share in cash and 0.093 of a share of Ashland common stock for each Hercules share, or $23.01 per Hercules share based on the July 10 closing price of Ashland stock.

The price represents a 38 percent premium over recent closing prices of Hercules stock.

The deal is valued at about $2.6 billion, based on 113.1 million shares outstanding as of April 25. The companies valued the deal at about $3.3 billion, including the assumption of $700 million of debt.

Based in Wilmington, Del., Hercules makes specialty chemicals used in the manufacture of a variety of products. The company is a leading supplier of specialty chemicals to the pulp and paper industry.

After the transaction closes, Ashland will have pro forma combined revenue for the 12 months ended March 31 of more than $10 billion, of which $3.5 billion is generated outside of North America.

The acquisition boosts Ashland''s position in the pulp and paper business, the company said. The combined businesses will also provide additional opportunities in other key water treatment markets, Ashland said, including municipal, industrial and marine.

Ashland expects to realize annualized run-rate cost savings of at least $50 million by the third year following the close of the deal, which is expected by the end of 2008.
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