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BUSINESS
Talks under way since mid-April ended last week when Koch Industries agreed to buy DuPont's Invista textile fibers business for $4.4 billion. The two expect to sew up the deal by early next year. Pending regulatory approvals, the deal will combine Koch's KoSa polyester business--acquired from Hoechst in 1998--with DuPont's nylon, spandex, and intermediates businesses to create a fibers powerhouse with about $9 billion in annual sales and 24,500 employees. The deal allows Koch, a maker of aromatic and derivative chemicals that find their way into most fibers, to integrate further downstream. Koch says its status as a private company will allow it to "weather the cycles of the man-made fibers and resins businesses." The definitive agreement places the last stitch in DuPont's new outfit. What in 1997 was a $45 billion oil, commodity chemicals, and textiles giant with 98,000 employees will become a svelte $20 billion science-based company focused on businesses including performance materials, nutritional products, and electronic chemicals with 62,000 employees. Now, said DuPont CEO Charles O. Holliday Jr. following the announcement, "we can focus on positioning DuPont for growth." At one time, fibers was among the most profitable of DuPont's business. But the company, the inventor of nylon, has struggled as the textile industry moved out of the U.S. DuPont will still be hitched to the fibers business for years to come. It will share some production sites with and lease others to Koch. In addition, long-term supply contracts call for Koch to provide raw materials to DuPont's engineering polymers business, while DuPont will supply things such as fluorochemicals to Koch.
NEW THREADS Polyester manufacturing at one of Koch's KoSa facilities. |
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