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Arco sells chemical unit
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June 18, 1998: 2:59 p.m. ET
Lyondell to buy Arco Chemical for $5.6 billion plus $870M debt
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NEW YORK (CNNfn) - Expanding its product base in the soft market for polymers and resins, Lyondell Petrochemical Co. said Thursday it will buy Arco Chemical Co. in an all-cash deal for $57.75 a share, or about $5.6 billion.
Lyondell, which plans to launch a tender offer for Arco Chemical on June 24, said it will also assume $870 billion in Arco Chemical debt.
The deal pairs two former siblings under oil giant Atlantic Richfield Co., better known as Arco, which stands to reap about $4.6 billion through the sale of its 83 percent stake in Arco Chemical.
Lyondell was originally formed as a unit of Arco in 1985 before being spun off in bits and pieces over the last decade. Only last year did the oil company eliminate its remaining stake in Lyondell.
The buyout "expands the company into important new product lines, adds a significant technology component and provides us with a broader base for domestic and international growth," said Lyondell President and Chief Executive Officer Dan Smith in a statement.
"This transaction will be significantly accretive to Lyondell's earnings," he added.
With the chemicals industry lagging, Los Angeles-based Atlantic Richfield had already been reducing its stake in Arco Chemical, based in Newton Square, Pa.
The proceeds could come in handy for Arco, which agreed last month to buy Union Texas Petroleum Holdings Inc., a Houston-based exploration company, for $3.3 billion.
Lyondell, with its industry in a slump, has sought to consolidate with others in the market to help cut costs, boost efficiency and revive its earnings power.
A deal for Arco Chemical would bring into Lyondell's fold a leading maker of chemicals used in solvents, resins, plastics and gasoline additives.
Arco Chemical shares (RCM) gained 6-7/16 to 57 in Thursday afternoon trade on the New York Stock Exchange. Lyondell stock (LYO) was off 5/8 at 27-1/8, while shares of Atlantic Richfield (ARC) were down 1 at 79-7/16. 
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