GE Specialty Materials announced yesterday that it has entered into an agreement to acquire OSi Specialties, an organosilicones business, from Crompton Corporation for $645 million. Crompton Corporation will take over the GE Specialty Chemicals business as part of the deal.
OSi will become part of GE Silicones, a division with 2002 revenues of $1.2 billion within GE Specialty Materials.
GE Specialty Chemicals produces additives for a broad range of applications for the plastics industry and generated sales of $165 million in 2002. The acquisition of Osi is expected to add more than $450 million in annual sales.
As part of the acquisition, Crompton will receive quarterly ‘earn-out’ payments for three years after closing based on the performance of the new combined GE Silicones business. Revenue from earn-out payments is expected to range from $105 million to a maximum of $250 million.
The transaction, which is expected to close in the third quarter of 2003, will allow GE Silicones to serve large, new market applications with OSi Specialties’ portfolio of complementary product technology.
‘This is a significant move for our business,’ said William A. Woodburn, president and CEO of GE Specialty Materials. ‘We are building a stronger GE Silicones business that will deliver better technologies and application development services to our global customers.
‘We are focusing our investment in platforms where we can win and grow for the long term. Selling our smaller Specialty Chemicals unit to the Crompton team will enable it to be part of a larger additives organisation where it can win over the long term.’