|
E.ON's chemical reaction
|
 |
May 15, 2000: 5:33 a.m. ET
Veba, Viag to combine chemicals arms in bid to create world No. 1
|
LONDON (CNNfn) - Veba and Viag, the diversified German utilities in the midst of merging, announced plans to combine their chemical interests in a bid to create the world's largest specialty chemicals business within four years.
Veba will contribute its 62 percent stake in specialty chemicals arm, Degussa-Huels, with Viag's wholly-owned SKW Trostberg unit to form a new company to be called Degussa.
E.ON, as the merged Veba-Viag will be known, would own about 64 percent of Degussa. Veba and Viag's shareholders will vote on the chemicals deal later this year, with completion of the merger scheduled for the start of next year.
The new Degussa will focus on six core business and would rival industry leaders such as Switzerland's Clariant and Ciba Specialty Chemicals.
 Degussa would sell non-core units with annual sales of  5 billion ($4.58 billion) within two years. Veba said that would raise around 3 billion to invest in the new chemicals business.
The merger would also generate annual synergies of around 300 million, of which 250 million would be in cost savings.
The German utility said the new Degussa's annual sales would more than double from 9 billion in 1999 to between 18 billion and 20 billion in four years. "This will be achieved by means of organic growth and specific acquisitions, with special focus on the United States and Asia," Veba said.
Shares in Degussa-Huels (FDHA) were marginally higher at 34.45 in Frankfurt early Monday. Veba (FVEB) was down 1.2 percent and Viag (FVIA) shares were 0.7 percent lower.
European regulators said Monday they would give a final ruling on Jun. 7 on whether they approve the merger of Veba and Viag. The European Commission, the Brussels-based executive arm of the European Union, has expressed concern about the market share of the merged company in the German electricity generating and distribution market. 
|
|
|
|
|
|
Degussa-Huels
Veba
Viag
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
