Chemtura to Review Options, Including Possible Sale(article)

Chemtura says its board has authorized management to consider a wide range of strategic alternatives available to the company to enhance shareholder value. Strategic alternatives to be considered may include, among others, select business divestitures, value-creating acquisitions, changes to the company's capital structure, or a possible sale, merger, or other business combination involving the entire company, Chemtura says. Chemtura announced last April that it would eliminate about 620 jobs, or 10% of its global workforce, as part of a restructuring plan that would result in about $50 million/year in costs savings beginning in 2008.
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Copyright Chemical Week Associates Jan 7-Jan 14, 2008
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UNITED STATES/AMERICAS



Chemtura says its board has authorized management to "consider a wide range of strategic alternatives available to the company to enhance shareholder value." The company has formed a committee of independent directors to oversee the process and has retained Merrill Lynch to act as financial adviser.
"Strategic alternatives to be considered may include, among others, select business divestitures, value-creating acquisitions, changes to the company's capital structure, or a possible sale, merger, or other business combination involving the entire company," Chemtura says.
"We interpret the announcement as a signal that Chemtura's fundamentals, heavily dependent on housing and auto, have taken another step down after two years of unabated deterioration," says Edward Yang, analyst at CIBC World Markets (New York). "Three major restructurings in two years, an activist shareowner, and high management churn make a potential breakup likely."
Chemtura announced last April that it would eliminate about 620 jobs, or 10% of its global workforce, as part of a restructuring plan that would result in about $50 million/year in costs savings beginning in 2008 (CW, April 11/18,2007, p. 9). Under the plan, it discontinued antioxidant production at its Pedrengo and Ravenna, Italy facilities during third-quarter 2007 and sold its $20million/year organic peroxide business to Pergan (Bocholt, Germany) last June (CW, June 13, 2007, p. 39). Chemtura also sold its $35-million/year optical monomers business to Acomon (Zug, Switzerland) last October in order to "place greater focus on its core businesses."
Chemtura named Edward P. Garden, a principal and co-founder of hedge fund Trian Fund Management (New York), to its board last year after the fund acquired a nearly 5% stake in company. Trian says it "seeks to invest in undervalued and under-performing public companies, and prefers to work closely with the management of those companies to effect positive change through active, handson influence and involvement."
Industry sources say that Chemtura had received bids from possible buyers, including private equity firms, in early 2007, but that a deal was not completed.
Chemtura says it does not expect to disclose any further developments regarding its exploration of strategic alternatives unless and until the board completes the review.Chemtura's earnings improved in the most recent quarter for which it has reported. It posted third-quarter net income of $2 million (1 cts/share) including special items, compared to a $40-miIIion loss in the year-ago period. Sales rose 9%, to $950 million. Chemtura says it expects continued improvement in the fourth quarter, due in part to increased demand from the electronics industry