Olin Corporation to
acquire chlor-alkali producer Pioneer
Acquisition of Pioneer Companies
Olin Corporate Strategy
1. Build on current leadership positions in Chlor-Alkali, Metals
and Ammunition
ー Improve operating efficiency and
profitability
ー Integrate downstream selectively
ー Expand globally where profitable
2. Allocate resources to the businesses that can create the most
value
3. Manage financial resources to satisfy legacy liabilities
Pioneer: A High Value Acquisition, Consistent with our Strategy
・ Synergistic,
bolt-on acquisition
・ Enhances
our chlor-alkali franchise
ー #3 in chlor-alkali, up from #4
− Diversifies geographic coverage
− Improves overall cost position
− #1 in industrial bleach
・ Further
low-cost expansion opportunities in the largest chlorine
consuming region of North America
・ Significant
near-term cost synergies of $35 million
・ Financial
metrics are very compelling
− Immediately accretive to EPS and
remains highly accretive throughout the cycle
− Balance sheet remains strong
Transaction Summary
Background
Structure
・ Olin Corporation to purchase
Pioneer Companies for $35.00 per share
Firm Value: $411 million
・ Equity value of $418 million at
the agreed purchase price
・ Net cash position of $7 million
assumed by Olin (cash of $129 million, total debt of $122
million)
Financial Impact on Olin Corporation
・ Immediately accretive to EPS and
remains highly accretive over the cycle
・ Balance sheet remains strong
Necessary Approvals
・ Pioneer shareholder approval
・ Regulatory approval
Pioneer: A Focused Company with Quality Assets
・ Pioneer is focused exclusively on
chlorine / caustic, bleach 漂白剤 and derivatives
・ World class operations
− St. Gabriel, LA: Strategically
positioned with pipeline to Gulf Coast customers;
expansion project lowers costs
− Becancour, PQ: Low cost
hydro-power based facility with downstream production
capabilities
− Henderson, NV: Western US facility
with captive consumption for downstream products
Pioneer purchased the Henderson Facility in October 1988 from a subsidiary of ICI Americas, Inc. (ICI). ICI acquired the facility in connection with the purchase of Stauffer Chemical Company.
− Dalhousie,
NB: Provides exposure to sodium chlorate markets
・ Strong downstream capabilities
− Chlorine pipeline to the major
urethanes, vinyls and ag chemicals customers
− 5 bleach plants in key parts of
North America
・ Superior financial results
− Excellent margins in chlor alkali
and downstream businesses
− Generated 2005 “peak” EBITDA of $126 million
− St. Gabriel project will further
lower costs and expand capacity
− Synergies provide enhanced
earnings throughout the cycle
Impact of the Combination on Olin
The
combination would make Olin the third largest producer of
chlor-alkali in North America
Enhanced Operational and
Geographic Platform
Strengthens Olin’s position in core businesses and adds a
strong bleach business in the West
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* Sunbelt Chloralkali is a 50:50 joint venture between PolyOne and Olin Corporation |