GRACE ANNOUNCES STRATEGY FOR 90s
GRACE ANNOUNCES STRATEGY FOR 90s BOCA RATON, Fla., Nov. 7 /PRNewswire/ -- W. R. Grace & Co.
(NYSE: GRA) today announced a far-reaching new corporate strategy that calls for enhancing shareholder value as its principal objective. This strategy targets earnings per share growth of at least 10 percent and after-tax return on shareholders equity of 20 percent. Additionally, this plan, which is designed to focus, upgrade and integrate Grace businesses, calls for: 1) focusing Grace's future on six core specialty chemicals and health care businesses; 2) reducing overhead by more than $50 million pretax annually; 3) lowering the total debt to capital ratio from its current 55 percent level to below 45 percent, and 4) generating gross proceeds of $1.5 billion from the sale of non-strategic businesses, $600 million of which is expected to be achieved by year-end 1991.
The strategy was developed by Grace's 12-person executive council following a comprehensive year-long study in which all businesses and more than 100 product lines were analyzed. In announcing the new strategy, J. Peter Grace, chairman and chief executive officer of Grace, said: "Adopting this strategy is perhaps our most significant move in the past four decades. It equals the time when Grace was transformed from a shipping and trading company to a world leader in specialty chemicals in the early fifties." Beyond focusing on clearly defined business segments, the strategy includes restructuring the Grace organization to streamline the management structure, establish global product line management teams, and more fully integrate corporate and operating units to realize greater leverage of organizational talents. One of the chief architects of the new strategy, J. P. Bolduc, president and chief operating officer, explained: "The strategy outlines a new corporate mission and sets forth a set of guiding principles serving as the roadmap for Grace throughout the remainder of this decade." Grace will focus on and aggressively grow the following core businesses: flexible packaging, container sealants, construction products, water treatment, catalysts and other silica-based products, and health care. Grace is already a worldwide leader in each of these business sectors. Grace said that the strategy calls for cash flow improvement programs and divestment proceeds to reduce total debt as a percent of total capital to below 45 percent from the current 55 percent level, and restructuring and reorganization activities that should lead to annual overhead cost reductions of more than $50 million pretax. Grace also announced expected gross proceeds in 1991-1992 of $1.5 billion from the sale of non-strategic businesses such as Baker & Taylor book, video, and software distribution units, the company's Organic Chemicals Division, Bekaert Specialty Textiles, Caribbean fertilizer operations and Grace Energy. So far this year, Grace has divested interests in agricultural chemicals, automotive chemicals, livestock feeds, and pharmaceuticals, with gross proceeds already in excess of $225 million. These proceeds, when combined with divestments expected to be completed by year-end 1991, should produce gross proceeds in excess of $600 million -- an interim target set in December 1990. Grace announced it would initially use these funds to reduce the company's debt load and related interest expense, while also reinvesting funds to aggressively grow its core businesses. Grace is the world's largest specialty chemicals and materials company with a leadership position in health care. -0- 11/7/91 /CONTACT: Fred Bona or Chuck Suits of W. R. Grace & Co., 1-800-GRACE99 or 407-362-2600/ (GRA) CO: W. R. Grace & Co. ST: Florida IN: CHM SU: SS-JJ -- FL007 -- 2231 11/07/91 12:38 EST
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|Date:||Nov 7, 1991|
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