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  October 18,  2004
Volume 82, Number 42
p. 10
 

BUSINESS

  VULCAN SELLS CHEMICALS TO OXY
Vulcan favors crushing rocks over supplying chlorine and caustic soda
 

ALEX TULLO
   
 
 
8242NOTW2_Geismar
NICE VIEW Vulcan's Geismar, La., complex is part of the sale to OxyChem.

VULCAN PHOTO

Vulcan Materials is exiting the chemicals business through the sale of Vulcan Chemicals to Occidental Chemical.

The sale includes chlor-alkali plants in Geismar, La.; Wichita, Kan.; and Port Edwards, Wis. It also includes Vulcan's hydrochlorocarbon (HCC)-240fa business and its chlor-alkali joint venture with Mitsui & Co. in Geismar.

For these assets, Vulcan will receive a cash payment estimated at $214 million. It will also receive two "earn-out" payments based on the performance of the businesses. One earn-out will be based on chlorine and caustic soda revenues minus costs such as natural gas. The other payment depends on volumes of HCC-240fa, a feedstock for a fluorocarbon made by Honeywell, sold through 2012.

Based on its projections of future business conditions--including a rosy outlook for chlor-alkali over the next several years--Vulcan estimates that the payments will total $145 million. OxyChem is also assuming responsibility for future environmental liabilities at the sites.

The deal will allow Vulcan to focus on its core business: supplying crushed stone to the construction industry. "Exiting the chemicals business will allow us to focus all of our resources into our construction materials business," CEO Donald M. James says.

Last year, Vulcan sold its water treatment and pulp and paper specialty chemicals business to Kemira.

The Vulcan plants have annual capacity for 815,000 tons of chlorine and 315,000 tons of ethylene dichloride (EDC). OxyChem's capacity is 3.1 million tons of chlorine and 1.5 million tons of EDC. According to data from consultancy SRI International, the deal will give OxyChem a 26% share of the U.S. chlorine market, making it second to Dow Chemical's 31%.

Completion of the transaction requires regulatory approval. The deal will also combine two of the largest caustic potash businesses in the U.S.

 
     
  Chemical & Engineering News
ISSN 0009-2347
Copyright © 2004
 


 
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