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February 18, 2002
Volume 80, Number 7
CENEAR 80 7 p. 12
ISSN 0009-2347
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BetzDearborn puts GE in new business; fire sales now less likely for Hercules


Lifting a huge weight off the shoulders of debt-burdened Hercules, General Electric has agreed to acquire Hercules' BetzDearborn water treatment business for $1.8 billion.

The transaction, expected to close by the end of June, puts GE into a new business. And GE claims the deal will instantly make it the second largest player in the water treatment chemicals and services market--after Ondeo Nalco--with 3,600 employees, sales of $1 billion, and 25 plants throughout the world.

"BetzDearborn is a great fit for our expanding business," says William A. Woodburn, president of GE Specialty Materials. The acquisition, he adds, will also allow GE to "utilize approximately 2,000 experienced Betz sales engineers to distribute to their customers" products and services from other GE businesses.

Without Betz, Hercules has annual sales of $1.6 billion, but Hercules CEO William H. Joyce says the sale will allow the company to "better support our corporation's remaining businesses and enhance shareholder value." Hercules planned to sell the entire company. And even though the "financial crisis is behind us," a company spokesman says Hercules will still "listen to all opportunities."

The transaction with GE will reduce the burden on Hercules and bring its debt down to a more manageable $1.2 billion, but the company is taking a beating. Hercules will recover only a little more than half of the $3.1 billion it paid to buy Betz in 1998 as it tried to gain mass and competitive strength.

Though Hercules retains Betz's $400 million-per-year pulp and paper operations, that business represents only about one-third of the original Betz. Considering bankers' fees, taxes, and the cost of debt, Hercules is paying dearly for its misadventures.

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