Summary
Occidental Petroleum Corporation (OXY), through its wholly-owned subsidiary Occidental Chemical Corporation and its subsidiary Basic Chemical Company, LLC, announced on October 12, 2004, an agreement to acquire three chemical manufacturing facilities from Vulcan Materials Company. This strategic asset purchase is expected to enhance OXY's chemical segment, focusing on key products such as chlorine, caustic soda, and ethylene dichloride (EDC). The transaction, valued at $214 million in cash with potential contingent payments and assumption of specified liabilities, is subject to standard regulatory approvals.
Key Highlights
- 1Occidental Petroleum's subsidiary, Basic Chemical Company, LLC, is acquiring three chemical manufacturing facilities from Vulcan Materials Company.
- 2The acquired facilities primarily produce chlorine, caustic soda, and ethylene dichloride (EDC).
- 3The transaction is structured as an asset purchase for an initial cash payment of $214 million, subject to net working capital adjustments.
- 4Potential for future contingent payments based on the performance of the acquired businesses.
- 5Occidental will assume specified obligations, while Vulcan retains certain liabilities, including litigation and those related to perchloroethylene in the dry cleaning business.
- 6The deal is subject to customary regulatory closing conditions.
- 7OXY has noted it's impractical to provide a GAAP measure of EBITDA for the acquired facilities due to the partial acquisition of contracts and a related joint venture.
Frequently Asked Questions
This acquisition is a strategic move to strengthen Occidental Petroleum's chemical segment by adding three manufacturing facilities that produce core chemicals like chlorine, caustic soda, and ethylene dichloride (EDC), likely enhancing its market position and product portfolio in these areas.
The initial cash consideration for the acquisition is $214 million, subject to adjustments for changes in net working capital. There is also a possibility of future contingent payments based on the performance of the acquired businesses, meaning the total outlay could be higher.
Occidental Chemical, through its subsidiary, will assume specified obligations. However, Vulcan Materials Company has retained liabilities not assumed by the purchaser, including all pending litigation and liabilities arising from the use of perchloroethylene in the dry cleaning business. Investors should note that Occidental is not assuming these specific liabilities.
The closing of the transaction is contingent upon customary regulatory approvals. The filing does not provide a specific closing date but indicates these conditions must be met.