HANSON TO ACQUIRE QUANTUM CHEMICAL IN MERGER VALUED AT APPROXIMATELY $3.2 BILLION
NEW YORK, June 30 /PRNewswire/ -- Lord White, Chairman of Hanson Industries, the U.S. arm of Hanson PLC (NYSE: HAN), and John H. Stookey, Chairman of Quantum Chemical Corporation (NYSE: CUE), today jointly announced that Hanson and Quantum Chemical have signed a definitive merger agreement. AGREEMENT TERMS Under the terms of the agreement, Hanson will acquire all the outstanding common stock of Quantum Chemical in a tax-free exchange for approximately 42 million new Hanson American Depositary Shares (ADSs), at the rate of 1.176 ADS per common share of Quantum Chemical. This is equivalent to $20 per Quantum share, based on the NYSE closing price of Hanson ADSs on June 29, 1993. Quantum has approximately 36 million shares outstanding. Quantum Chemical's outstanding debt of approximately $2.5 billion brings the total acquisition value to approximately $3.2 billion. The merger requires the approval of the holders of 66-2/3 percent of the outstanding shares of Quantum Chemical common stock. Quantum's financial advisor has rendered an opinion that the consideration to be received in the merger is fair to the Quantum Chemical shareholders from a financial point of view. Closing of the transaction is also subject to other customary conditions, including the effectiveness of a registration statement covering the ADSs to be issued. Quantum has agreed not to solicit other acquisition proposals nor, except as may be required by its fiduciary duties, to accept an unsolicited proposal. Quantum Chemical will comply with its debt repurchase obligations arising as a result of this transaction under Quantum's existing indentures. Prior to consummation of the merger, Hanson also may, subject to price and availability, purchase Quantum's debt securities from time to time in open market and private transactions.
Quantum Chemical is the largest U.S. manufacturer of polyethylene, a leading manufacturer of industrial chemicals, and the second largest U.S. retail distributor of propane gas. In 1992, Quantum had net sales of approximately $2.4 billion and operating profit of $61 million, before interest charges of $262 million. Total assets at March 31, 1993 were approximately $3.1 billion. Lord White said, "The acquisition of Quantum Chemical represents a major addition to our Chemicals business. We believe we are acquiring a world-class business at a point in the industry cycle which allows us to obtain significant value. As a leader in basic and growing businesses -- chemicals and plastics -- as well as a major propane gas distributor, we believe Quantum's profitability can benefit from Hanson's strong financial position and proven management procedures. "I am also delighted to welcome Quantum's 25,000 shareholders into the Hanson family. With this acquisition, our U.S. shareholders will account for approximately 27% of our outstanding shares." John H. Stookey, Chairman of Quantum Chemical, said, "This transaction provides an attractive opportunity for Quantum Chemical's shareholders to gain immediate value for their investment. Through this tax-free exchange, Quantum's shareholders will also have an investment in a company with an outstanding record of capital appreciation and dividends. "In addition, we are pleased that Quantum's customers and its 8700 employees will benefit from the strength of the Hanson group."
MARGIN IMPROVEMENT POTENTIAL
David H. Clarke, Deputy Chairman and Chief Executive Officer of Hanson Industries, said, "We believe that the current severe and protracted downturn in the polyethylene business is nearing an end. An expansion of the economic recovery and the steady absorption of capacity within the polyethylene industry -- which admittedly may require some patience -- hold the potential for a strong recovery for Quantum Chemical. In 1988, at the high point in the industry cycle, Quantum achieved operating profits of approximately $760 million, compared to last year's operating profits of $61 million. "Suburban Propane, too, has suffered from abnormal conditions, such as unusually warm winters which have reduced propane consumption. A return to more normal weather conditions would counteract that trend. "Importantly, there is much that we believe can be done toward improving Quantum Chemical's financial performance. Significant savings could be achieved by refinancing Quantum's large high-yield debt burden at Hanson's more favorable borrowing rates, a strategy which has already been successful in our acquisition of Beazer. We also intend to continue to carry out the major cost reduction programs which Quantum has begun. "All elements considered, we anticipate a positive contribution by Quantum Chemical to Hanson in 1994, with potential for significant additional improvement as the economic recovery unfolds.
QUANTUM CHEMICAL PROVIDES VALUABLE ASSETS
"We were also attracted to Quantum Chemical because of its strong asset value. Quantum's recently completed $1.6 billion capital expenditure program, highlighted by the construction of the new, world-class 1.65 billion pound ethylene plant at La Porte, Texas, provides the company with state-of-the art technology. With its start-up problems now behind it, together with recently instituted manufacturing improvements, this new plant is expected to provide greater productivity at lower cost," Mr. Clarke concluded. Quantum Chemical Corporation, headquartered in New York and scheduled to relocate to Cincinnati, Ohio, is engaged in the production and marketing of petrochemicals through its USI Division, and the retail and wholesale distribution of propane through its Suburban Propane Division. The Suburban Propane Division also sells propane, propane appliances and services. The USI Division is a leading manufacturer of polyolefin resins and the largest domestic manufacturer of polyethylene. The principal end markets for polyolefin products are packaging for food, beverages and consumer products, toys, appliances, and automotive components. The USI Division also produces specialty polyolefins which include powders, hot melt resins, wire and cable insulation compounds, and color concentrates. USI also manufactures industrial chemicals which include methanol, acetic acid, vinyl acetate and ethanol. These products are used in the manufacture of paints, sealants, personal care and pharmaceutical products and automotive safety glass. The Suburban Propane Division is one of the two largest domestic distributors of propane, serving 1.2 million customers and operating in 45 states through 365 sales and service centers. Hanson PLC is a British-American industrial management corporation. In the US, Hanson Industries' operations include Peabody Coal, SCM Chemicals, Cavenham Forest Industries, Beazer, Grove Crane, Jacuzzi Whirlpool Baths, Tommy Armour Golf, Ames Tools, Farberware Cookware and Hanson Lighting Group, among others. In the United Kingdom, Hanson's holdings include Imperial Tobacco, ARC Aggregates, Beazer Homes, London Brick, Butterley Brick, and Smith Meters. Quantum Chemical Corporation -- Information Sheet
Quantum Chemical Corporation is the largest U.S. manufacturer of polyethylene and a leading manufacturer of industrial chemicals and specialty plastics. Quantum is also one of the two largest U.S. retail distributors of propane.
USI DIVISION Leading U.S. Market Share Positions
Product Rank Market Share Low Density Polyethylene (LDPE) No. 1 20.5 percent Linear Low Density Polyethylene (LLDPE) 3 16.5 percent High Density Polyethylene (HDPE) 2 13.7 percent Acetic Acid 2 20 percent Vinyl Acetate (VAM) 2 23 percent Hot Melt Resins 1 31 percent Wire & Cable Resins 2 20 percent Color Concentrates 2 20 percent Ethanol 2 30 percent
World Class Manufacturing Facilities
Plant Locations Principal Products Annual Capacity (In millions) Morris, IL Ethylene 1,060 lbs. LDPE 540 lbs. LLDPE 300 lbs. Polypropylene 280 lbs. Ethylene oxide and 220 lbs. ethylene glycol Streamwood, IL BOPP 40 lbs. Tuscola, IL Ethyl alcohol 50 gls. Ethyl ether 5 gls. LDPE 15 lbs. Clinton, IA Ethylene 940 lbs. LDPE 430 lbs. HDPE 450 lbs. Adhesive tie layer resins 22 lbs. Clinton, MA Special polymers 25 lbs. Fairport Harbor, OH Special polymers 55 lbs. Heath, OH Special polymers 30 lbs. Recycling 32 lbs. Chocolate Bayou, TX HDPE 400 lbs. Crockett, TX Special polymers 120 lbs. La Porte, TX Ethylene 1,500 lbs. LDPE 455 lbs. LLDPE 85 lbs. HDPE 570 lbs. Acetic acid 900 lbs. Vinyl acetate monomer 800 lbs. Methanol 200 gls. Port Arthur, TX LDPE 190 lbs. LLDPE 300 lbs. HDPE 240 lbs.
Research Centers Morris, IL
Cincinnati, OH (Corporate headquarters will be relocated to this facility by December 31, 1993)
SUBURBAN PROPANE 365 Sales offices, in 45 states
'92 '91 '90 '89 '88
Retail 558 546 567 638 650 Wholesale 142 126 122 132 156 Total 700 672 689 770 806
Five Year Financial Data ($ millions)
'92 '91 '90 '89 '88
Plastics 1,225.7 1,374.8 1,558.7 1,568.9 1,780.4 Chemicals 500.1 509.7 400.5 446.3 438.8 Propane 641.6 646.6 694.2 650.2 677.7 Other --- 1.3 2.7 5.6 25.0 Net Sales 2,367.4 2,532.4 2,656.1 2,671.0 2,921.9 Operating Income 61.4 87.5 255.0 475.5 759.8 Interest Expense 262.2 250.2 208.8 276.7 116.4 Net Income (Loss) (287.5)a (123.3) 21.2 247.4 382.7 Capital Expenditure 109.4 160.8 458.4 583.3 333.5 Depreciation and 190.7 200.6 160.4 151.9 145.0
Research and Development 44.7 47.1 48.9 44.5 38.3 Long-Term Debt 2,504.0 2,516.1 2,530.2 2,362.5 1,332.1 Assets 3,153.9 3,198.9 3,222.0 3,003.8 2,907.7 Net Worth (Deficit) (471.1) (203.3) (101.0) (172.3) (407.0)
a. Includes $169.1 million cumulative effect of adoption of FAS 106 and FAS 109.
-0- 6/30/93 /CONTACT: David H. Clarke, Deputy Chairman and Chief Executive Officer, or John G. Raos, President, or Mickey Foster, V.P.-Investor Relations, all of Hanson Industries, 908-603-6600; or Joseph F. Pilaro, V.P.-Investor Relations of Quantum Chemical, 212-551-0552/ (HAN CUE)
CO: Hanson PLC; Quantum Chemical Corporation ST: New York, Ohio IN: CHM SU: TNM
LG -- NY013 -- 7035 06/30/93 09:50 EDT
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|Date:||Jun 30, 1993|
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