WILMINGTON, Del. (AP) Ashland's stock plummeted Friday after it said it would buy specialty chemicals maker Hercules Inc. in a $2.6 billion cash-and-stock deal that also includes a hefty debt load.
Ashland Inc.'s stock fell 13 percent after it announced the deal, which also includes the assumption of $700 million of Hercules Inc. debt, sparking worries that the payments would stymie growth.
Ashland shares closed Friday at $41.10, down $6.31, or 13.3 percent. Hercules shares ended the day at $20.95, up $4.29, or 25.7 percent. The offer represented a 38 percent premium over Hercules' Thursday closing price.
Ashland, founded in 1924, makes specialty chemicals, distributes chemicals and plastics, and sells automotive lubricants, car-care products and quick-lube services. Its product brands include Valvoline motor oil and Zerex antifreeze. The company has 12,000 employees.
Hercules, which was spun off from DuPont Co. in 1912, supplies of water treatment chemicals to the pulp and paper industry. It also manufactures products used in consumer goods including toothpaste, chewing gum, ice cream and latex paint.
Under the agreement, Covington, Ky.-based Ashland will acquire all the outstanding shares of Hercules for $18.60 per share in cash and .093 shares of Ashland common stock for each share of Hercules common stock.
The transaction, which is contingent on approval by Hercules shareholders, is expected to close by the end of 2008.