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FOLLOWING THROUGH with its plan to focus on businesses it considers platforms for growth, Cytec Industries Inc. has reached a definitive agreement to sell its paper chemicals business. The sale will be divided into two transactions. The sizing and strength operations will be sold to the Bayer Group for $90 million, and the rest will go to Ciba Specialty Chemicals for $23 million.
Although the paper chemicals business being sold to Bayer had $85 million in pro forma sales last year from its strong positions in the printing. writing, towel and tissue paper markets, Cytec has not considered the division a core business. In March. David Lilley, chairman, president and CEO of Cytec, said the company would review "all strategic options" so that "the value of our paper chemicals business may be enhanced."
At the time, Barry Friedfeld, senior analyst with Kline & Co., a Little Falls, N.J.-based consultancy, noted that "Cytec wants to be number one or number two in every market they're in. They have a very good business in paper chemicals, but it is not a one-stop shopping business." The analyst cited Hercules/BetzDearborn and Nalco, which provide total solutions for all their paper chemical customers' needs (CMR, 3/27/00, pg. 24).
With regard to the current sale, Mr. Lilley says, "Monetizing these assets and redeploying the cash is consistent with increasing the economic returns of Cytec, an objective of our recently announced portfolio realignment. This accomplishment further streamlines Cytec and increases the focus on growing our platform businesses."
He identifies those platform businesses as specialty resins, water soluble polymers, mining chemicals, phosphine chemicals and Cytec Fiberite, the company's specialty materials business.
The company will retain...