By Patrick Raleigh, UT On-line/news editorHouston, Texas-Lyondell Chemical Co. and Millennium Chemicals Inc. are merging to create what they claim will be North America’s “third-largest independent, publicly-traded chemical producer.” Under a $2300-million transaction, Millennium shareholders will receive between 0.95 and 1.05 shares of Lyondell common stock for each share of Millennium stock.Lyondell will also pick up about $1300 million of Millennium net debt, as part of the deal, which is expected to close in the third quarter of 2004, Lyondell said 29 March.Houston-based Lyondell and Millennium have combined 2003 sales of over $11 000 million, and together employ about 10 000 worldwide. The combination will include Equistar-a $6545-million sales joint venture, owned 70.5-percent by Lyondell, and 29.5-percent by Millennium. Lyondell last year reported sales of $3801 million from the supply of propylene oxide and its derivatives including propylene glycol, butanediol and propylene glycol ethers; as well as styrene monomer and MTBE-co-products of PO production. The Texan group also has a 58.75-percent stake in Lyondell-Citgo Refining LP, a $4162-million turnover refinery company.Millennium posted 2003 sales of $1687 million, about 70 percent from the supply of TiO2, of which it is the world second largest producer, behind DuPont. The Hunt Valley, Maryland-based firm also operates a global acetyls business, which stated Lyondell, “is a significant ethylene consumer and, as such, integrates very well with Equistar.” Millennium is also a leading supplier of titanium tetrachloride, zircon and zirconia, silica gel and cadmium-based pigments. The deal has some implications for the rubber sector. Equistar, for example, is a major supplier of butadiene and isoprene feedstock, while Millennium claims to be a world leader in the production of organic peroxides to the rubber industry. After the close of the transaction, the two groups’ businesses will be operated by Lyondell Chemical Co., which will continue to be led by Dan Smith as president and chief executive officer. “By integrating Millennium’s operations with Lyondell’s and Equistar’s, we believe there is value that can be achieved through the realization of synergies. We expect to realize at least $50 million in cost savings from this combination, bringing value to all of the shareholders.”This is another step in our long-standing strategy to increase Lyondell’s global depth and breadth, and maintains our leverage to the ethylene cycle, allowing us to use the resulting cash flow to reduce debt,” the Lyondell boss added.”
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