Herculean Merger Pumps Up Shares

Stock in BetzDearborn soared Thursday after Hercules Inc. announced it's buying all the specialty chemical maker's stock for a 100 percent premium, or about double its closing stock price Wednesday.
Hercules agreed to buy BetzDearborn for $72 per share in cash, or about $2.4 billion. Hercules will also assume approximately $700 million in BetzDearborn debt.

BetzDearborn raced 32 5/8 points higher to 68 1/2 on the news; Hercules muscled 4.9 percent higher to 38 7/8. BetzDearborn shares closed Wednesday at 35 7/8.

Hercules said the two chemicals companies "will create a premier paper chemical business with the world's most complete offering of products and services for the pulp and paper industry."

Moreover, Hercules said BetzDearborn's water and industrial process treatment business will give Hercules another leading franchise in specialty chemicals.

Combined, the two companies had revenues of $3.5 billion in 1997. The deal is expected to close in the fourth quarter this year.

Hercules expects the acquisition to add to cash earnings in the first year and to reported earnings per share in the second year. The companies expect cost savings of $100 million.

Hercules will be led by its current CEO R. Keith Elliott and BetzDearborn's CEO William R. Cook, who will both serve as co-CEOs. Elliott will serve as chairman of the board and Cook as vice chairman.

BetzDearborn, headquartered in Trevose, Pa., had 1997 sales of $1.3 billion. The company supplies engineered chemical treatment programs for influent water, boiler, cooling, wastewater and process systems in industrial, commercial and institutional establishments.

Hercules businesses include Aqualon, FiberVisions, Food Gums, Paper Technology and Resins. Hercules, with $1.9 billion in 1997 sales, has approximately 7,000 employees, 49 manufacturing plants, two major research centers and eight applications laboratories.

Written by Emily Church