Swiss specialty chemicals and biotechnology company Lonza Group Ltd. said Monday it will buy Arch Chemicals Inc., a maker of antibacterial products, for $1.2 billion in cash.
The deal values the Norwalk, Conn., company at $47.20 per share, and also includes $170 million in debt. Lonza will start a tender offer for Arch Chemicals shares by Friday, and it expects to complete the acquisition later in 2011. The board of directors of Arch Chemical voted in favor of the sale and recommended shareholders tender their shares in support.
Lonza said it will have about $1.6 billion in annual revenue from sales of bacteria-killing products, making it one of the leaders in that market. Arch Chemicals reported $1.38 billion in revenue in 2010, and Lonza said $1.2 billion of that total came from sales of products used to kill harmful bacteria in water, in industrial applications, for wood protection, and for personal care. Lonza said the market for antibacterial products is growing steadily and is worth about $10 billion per year.
Shares of Arch Chemicals surged 11 percent Friday despite weak economic news, and Monday the stock gained another $5.20, or 12.3 percent, to $47.37 while the broader markets slid. The stock hit a 52-week high of $47.45 during intraday trading and has traded as low as $29.29 over the past year. Lonza said it is offering a premium of 36.7 percent to the stock's average closing price over the last 30 days.
Arch Chemicals has approximately 3,000 employees and 23 manufacturing and research sites. Lonza spokesman Dominik Werner told The Associated Press some jobs will be shed after the deal closes. Werner said any job cuts would probably come from administration and would not affect production.
"A good part of the cost reduction is based on the fact that we're combining two corporations and so we don't need the corporate overhead of Arch," he said. "There will certainly be job reductions there, but how much and when is still open."
Lonza Group shares rose just under 1 percent to 67.40 Swiss francs ($80.50) on the Zurich exchange.