Cytec Sells Paper Chemicals to Ciba
WEST PATERSON, N.J. - Cytec Industries Inc. (NYSE:CYT) said today that it has reached Definitive Agreements to sell its Paper Chemicals business in two transactions. Cytec will sell the direct sales portion of its retention and drainage aids, and fixative products for the paper industry, including its Polyflex(R) technology, to Ciba Specialty Chemicals for approximately $23 million cash (pre-tax). In addition, Cytec will retain approximately $2 million of accounts receivable.
Cytec will continue to market waste water and water treatment chemicals directly to the paper industry; it will also provide its broad line of water soluble polymers to third party resellers servicing multiple markets, including the paper industry.
Closing of the sale is expected by the end of 2000 and is subject to regulatory approval and other conditions. The other transaction involving the sale of the paper chemical sizing and strength business is being reported in a separate news release, also issued today.
According to the two Definitive Agreements, Cytec will be selling its paper chemicals sizing, strength, retention and drainage aids business for total cash (pre-tax) consideration of $115 million; or net after-tax proceeds of approximately $75 million. Not included above, is $15 million of paper chemicals' accounts receivable that will be retained by Cytec.
The direct sales, marketing, R & D, and technical services personnel, and the dedicated field and laboratory equipment associated with the paper retention, drainage and Polyflex(R) product lines are included in the sale. All of Cytec's Water and Industrial Process facilities will be retained to manufacture products for Cytec's Water Treatment, and Mining Chemicals businesses, both of which are growth platforms and market leaders. Cytec's manufacturing facilities will also be making Polyflex(R) and certain retention and drainage aids products for Ciba Specialty Chemicals under new Manufacturing Supply and Distribution Agreements.
Mr. David Lilley, Chairman, President and Chief Executive Officer said, "We are pleased to have achieved an agreement to divest our Paper Chemicals business. Earlier this year we identified the Paper Chemicals business as non-core and stated that we would evaluate the strategic options. Despite Paper Chemicals innovative products, superior technology, and outstanding people, we could not identify an acceptable path to a No. 1 or No. 2 market position. Monetizing these assets and re-deploying 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.
"Our decision to sell the business in two transactions enabled the strategic buyers to acquire the products and technology that they valued the most, while also providing our Cytec shareholders with the greatest value. This transaction and the reinvestment of the after-tax proceeds will be accretive to earnings per share from continuing operations beginning in 2001.
"We will invest the cash from this transaction consistent with our strategic priorities and our financial discipline. Our priorities are the organic growth of, and strategic acquisitions for, our Platform businesses--while we continue the repurchase of Cytec stock. This divestment of Paper Chemicals and our future actions will continue to demonstrate that we are aggressively executing our plan to increase shareholder value," Mr. Lilley concluded.
Profile of Ciba Specialty Chemicals AG
Ciba Specialty Chemicals is a leading company dedicated to producing high-value effects for customers' products. Its specialty chemicals, added in small quantities, enhance the performance, look and feel of the final product. Business success is driven by a long-term strategy of innovation and continuous operational improvements. Ciba brings new and creative thought to the processes and products of customers in more than 120 countries. Ciba's continuing operations generated sales of CHF 9.0 ($6) billion in 1999 and spent some CHF 300 ($200) million on R&D to foster innovation across the Company.
Cytec's Corporate Profile
Cytec Industries Inc. is a specialty chemicals and materials technology company with 1999 sales of $1.4 billion and diluted earnings per share of $2.73. Its growth strategies are based on developing technologically advanced customer solutions for global markets, including: aerospace, plastics, industrial coatings, mining, and water treatment. Cytec is in the S & P mid-cap 400 index.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in Cytec's filings with the Securities and Exchange Commission.
Contact: Cytec Industries Inc., West Paterson William (Bill) Cleary (Investment Community) 973/357-3298 or George Yuro (Media) 973/357-3319 www.cytec.com