Lyondell announces agreement to acquire Millennium Chemicals Inc.

Pigment & Resin Technology

ISSN: 0369-9420

Article publication date: 1 August 2004



(2004), "Lyondell announces agreement to acquire Millennium Chemicals Inc.", Pigment & Resin Technology, Vol. 33 No. 4.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

Lyondell announces agreement to acquire Millennium Chemicals Inc.

Lyondell announces agreement to acquire Millennium Chemicals Inc.

Lyondell Chemical Co. said it will acquire Millennium Chemicals Inc. in a stock transaction valued at about $1 billion. The deal, if completed, would create the third-largest publicly traded chemical manufacturer in North America. Lyondell will also assume $1.3 billion in Millennium debt, the companies said.

The merger will combine two important US chemical companies that hold major positions in various commodities and specialty products, including titanium dioxide (TiO2), propylene oxide and acetyls. The companies are also partners in the Equistar joint-venture business, a producer of ethylene, propylene, polyethylene, and aromatics.

Millennium, based in Hunt Valley, MD, is the second-largest producer of TiO2 in the world, and operates production facilities on four continents. The company is also a major supplier of acetic acid and vinyl acetate monomer, silica gel and cadmium-based pigments.

Millennium shares surged more than 20 per cent, or $2.56, to close at $15.11 on the New York Stock Exchange. Lyondell shares fell 54 cents, or 3.4 per cent, to $15.08.

Under the sale agreement, Millennium shareholders will receive between 0.95 and 1.05 shares of Lyondell common stock for each share of Millennium common stock. Based on recent trading, the transaction is valued at about $2.3 billion, including the $1.3 billion of Millennium net debt, the companies said.

The two companies had combined 2003 revenues of more than $11 billion and market capitalization of nearly $4 billion. The combined company will operate in 16 countries and employ about 10,000 people worldwide.

The transaction, subject to approval by both companies' shareholders, is expected to close in the third quarter. The company will retain the Lyondell Chemical name and will be based in Houston. Lyondell's President and Chief Executive Officer, Dan F. Smith, will hold those positions with the merged company. “This is another step in our long-standing strategy to increase Lyondell's global depth and breadth”, Smith said.

Robert E. Lee, Millennium President and CEO, said: “This is the right move at this juncture for Millennium. The transaction creates compelling value for our shareholders. We strongly believe that the added diversification and market leadership brought by the TiO2 and acetyls businesses will greatly benefit the combined entity. These businesses also will benefit from being part of a larger global entity”.

Lyondell, headquartered in Houston, is a major producer of propylene oxide; propylene oxide derivatives including propylene glycol, butanediol and propylene glycol ethers; and styrene monomer and MTBE. Through its current majority stake in Equistar Chemicals L.P., Lyondell is also a major producer of ethylene, propylene and polyethylene in North America and a major producer of ethylene oxide, ethylene glycol, specialty polymers, and polymeric powder.

In addition to TiO2, Millennium is reported to be the largest merchant seller of titanium tetrachloride and is a major producer of zircon and zirconia, silica gel and cadmium-based pigments. It is also the second-largest producer of acetic acid and vinyl acetate monomer in North America. The company currently holds a 29.5 per cent stake in Equistar.

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