In its largest deal since 2008, chemicals company Ashland Inc. announced Tuesday that it agreed to acquire privately held International Specialty Products, Inc. for roughly $3.2 billion in cash.
The deal, if approved by regulators, continues the Covington, Kentucky-based company’s recent moves to shed its commodity chemicals and chemicals distribution business and transform itself into a dominant maker of specialty chemicals, the Financial Times said.
Ashland tapped Cravath, Swaine & Moore, a firm that it relied on for several decades. Corporate partners Susan Webster and Thomas Dunn are leading the deal. The relationship between Cravath corporate head Webster and Ashland goes back to 1995; she most recently advised on Ashland’s sale of its distribution business to TPG Capital for $930 million, which closed in March (as we reported here).
Webster and Dunn are being assisted by banking and finance partner C. Allen Parker and senior attorney Christopher Kelly; benefits partner Eric Hilfers and specialist attorney M.C. Tania Balthazaar; tax partner Stephen Gordon; and real estate specialist attorney Gary Eisenman. Also contributing are corporate associates Samuel Whittington, Michael Coyne, and Baolu Lan, and environmental specialist attorney Annmarie Terraciano. Ashland counsel on the deal are senior vice president and general counsel David Hausrath, assistant general counsel and corporate secretary Linda Foss, and assistant general counsel Michael Roe.
Wayne, New Jersey-based ISP is looking to Sullivan & Cromwell; its outside team is led by Keith Pagnani and Krishna Veeraraghavan. Sullivan chair Joseph Shenker and Ivan Deutsch are handling family and real estate matters; Marc Trevino is handling benefits; Ronald Creamer, Jr. is handling tax matters; Nader Mousavi is advising on IP matters; and Robert Downes on financing.
Under the terms of the deal, Ashland is paying with cash and financing from Citigroup, Bank of Nova Scotia, Bank of America Merrill Lynch, and U.S. Bancorp. If it is unable to secure the necessary financing, Ashland is required to pay ISP a $413 million termination fee. Ashland looked to B of A Merrill Lynch as financial adviser, while ISP turned to Moelis & Company.
In a statement, Ashland CEO James O’Brien called the deal a “defining transaction” that enables the company to significantly expand its market position “to higher margin, higher growth and less cyclical global markets like personal care and pharmaceuticals.”
ISP makes niche chemicals for skin, hair and oral care products, which O’Brien said are “fast-growing segments of the $5-billion-plus personal care specialty ingredient market.” ISP had $1.6 billion in sales and $360 million in operating earnings for the year ended March 31, 2011.
The deal is expected to close by the end of September pending regulatory approvals.
This article originally appeared in The Am Law Daily.