Occidental Petroleum Acquires 65% Equity Interest in INDSPEC Chemical Corporation for $85 Million

Strategic Insights -

Occidental Petroleum Corporation has announced the acquisition of a 65 percent equity interest in INDSPEC Chemical Corporation for $85 million. Under the terms of the agreement, INDSPEC's management and employees will retain voting control of the company. The transaction, expected to close in early 1996, will use common stock of Occidental as consideration. J. Roger Hirl, president of Occidental's chemical division, stated that this acquisition will be non-dilutive from day one and will provide a stable base of earnings, reducing the overall cyclicality of OxyChem's earnings.

Key Takeaways:

  • Occidental Petroleum Corporation has acquired a 65 percent equity interest in INDSPEC Chemical Corporation for $85 million.
  • INDSPEC's management and employees will retain voting control of the company.
  • The transaction, expected to close in early 1996, will use common stock of Occidental as consideration.
  • J. Roger Hirl, president of Occidental's chemical division, believes this acquisition will be non-dilutive from day one and will reduce the cyclicality of OxyChem's earnings.
  • INDSPEC is the world's largest producer of resorcinol, with capacity of 50 million pounds per year at its Petrolia, Pennsylvania, facility.
  • Resorcinol is used primarily as a bonding and stiffening agent in tire manufacture, and also in high-performance wood adhesives and fire-retardant plastic additives.
  • Occidental's investment in INDSPEC is part of its commitment to grow its specialty chemical business and achieve a larger base of stable earnings.

Statistics:

  • 65% equity interest in INDSPEC Chemical Corporation acquired by Occidental Petroleum Corporation for $85 million.
  • Expected transaction close in early 1996.
  • 50 million pounds per year capacity for resorcinol production at INDSPEC's Petrolia, Pennsylvania, facility.
  • 53% of worldwide resorcinol capacity held by INDSPEC.
  • $115 million in 1994 sales by INDSPEC.
  • Occidental will use common stock as consideration for the transaction.

Sources:

  • PR Newswire
  • Occidental Petroleum Corporation
  • INDSPEC Chemical Corporation
  • J. Roger Hirl, president of Occidental's chemical division.