13 February 2002
GE continues purchasing wave, buys Hercules water unit
Driven by the need to reduce debt, Hercules Inc. said today it will sell the water treatment business of its BetzDearborn division to GE Specialty Materials for $1.8 billion in cash.
The paper process chemicals business, approximately one-third of the BetzDearborn company purchased by Hercules in 1998, will remain with Hercules.
BetzDearborn's water treatment business has $1 billion in annual sales, 3,600 employees worldwide, and 2001 earnings of $217 million.
Hercules said it has also struck an agreement with GE to distribute and service BetzDearborn's water treatment products to the pulp and paper industry. The entire transaction is subject to regulatory and other customary approvals. It is expected to close in the spring of 2002, the companies said.
"This transaction is extremely significant for our company and all our constituents, including customers, employees, and shareholders," said William H. Joyce, Hercules CEO. "Last year, the company was in a difficult financial situation, carrying too much debt. The sale of the water treatment business is the second step in the program and will sharply reduce our debt and permit us to better support the corporation's remaining businesses and enhance shareholder value from a position of strength."
After debt reduction and tax proceeds, Hercules will have available approximately $1.665 billion of the $1.8 billion cash price.
Joyce said that since January 2001, from this and other transactions, the company will have received net proceeds of approximately $2 billion to reduce debt. Hercules's remaining businesses include Aqualon, Pulp and Paper (including the retained BetzDearborn Paper Process chemical products acquired in 1998), FiberVisions, and Rosins and Terpenes.
Because GE nixed its ill-fated move to purchase Honeywell, the industry giant paid $777 million for electronic security company Interlogix Inc. GE's Power Systems unit also acquired two Honeywell operations and two sets of business assets related to petroleum exploration, underground boring for utilities, and the generation of power.
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