HEXCEL AND Ciba-Geigy have signed a letter of intent to combine their composite-materials businesses. Under the $220 million deal, Ciba's Composites division would become part of Hexcel, and the Swiss-based pharmaceutical and chemical group would take a 49.9% stake in the combined company, which will have annual sales of more than $600 million.
The two companies hope to sign a definitive agreement in the third quarter of 1995 and close the transaction by the end of the year. The deal is subject to shareholder approval, financing and anti-trust clearance. Hexcel, which emerged from bankruptcy protection in February, would pay Ciba an estimated $80 million to reflect its debt and liabilities.
Ciba chairman Heini Lippuner says that the combination of the businesses "...would be a pragmatic solution to the changes within [the composites] market", which has been hit by both the airline recession and defence downturn. Hexcel chief executive John Lee says that the deal "...makes strategic sense. The two operations are unusually complementary in terms of both product line and geographic reach."
Anaheim, California-based Ciba Composites, with 1994 sales of $293 million, is strong in Europe, while Pleasanton, California-based Hexcel, with 1994 sales of $314 million, is strong in the USA. The USA accounts for 51% of combined sales, Europe 42% and Asia 7% -the combined company "...could lead to broader access to Asia", says Ciba Composites chairman Juergen Habermeier.
The combined company would be a major provider of honeycomb, pre-impregnated and fabric composites to the aerospace industry and "the biggest integrated advanced-materials supplier", says Steven Forsyth, Hexcel's international vice-president.
Lee, who would be chairman of the combined company, with Habermeier as president, says that the transaction "...would allow Hexcel to emerge from its global restructuring as one of the strongest, most diversified and technologically advanced players in our industry".
Source: Flight International
