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Crompton Corp. has entered into a definitive agreement to sell its organosilicones business, OSi Specialties, to General Electric in exchange for GE's specialty chemicals unit and $650 million in cash. Crompton CEO Vincent A. Calarco says the move will reduce his company's debt by more than 40% this year. The deal will also tighten Crompton's focus on polymer additives, increasing sales in the sector to about 60% of overall company revenue. GE Specialties, with a product line including secondary antioxidants and impact modifiers, had 2002 sales of $165 million. Under terms of the deal, set for completion in the third quarter, Crompton will also receive quarterly payments for three years, totaling between $105 million and $250 million, based on the performance of the combined silicones businesses. Calarco says backward integration to raw materials is becoming critical to success in silicones. Crompton lacks such integration for its OSi business, which had 2002 sales of $457 million. GE, which is integrated, will combine OSi with its existing $1.2 billion silicone business, cementing its position as the second largest silicones producer after Dow Corning. John Roberts, an analyst with Buckingham Research Group, calls the deal "very positive" for Crompton. He says the company's nonpolymers businesses, including pesticides, white oils, and a seed treatment joint venture, "may be available for sale at the right price, but there is no immediate pressure for Crompton to sell additional assets."
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