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Arkema

How nice it is to see a company getting ready for a spin out not to be saddled with debt and environmental liabilities. Click here if you want to experience the full nerdish joy of the prospectus (apparently you shouldn't do this if you're in the US).

Two interesting points, irrespective of the number of shares you may actually own as a shareholder in Arkema (you'll get one share for every 10 shares in France's Total that you own) you can never have more than 10% of  the voting rights. The second point is that if you hold your shares in your own name for at least two years, you get double voting rights (to a maximum of 20% of the total voting rights). The best bit is that even if you get divorced, you can transfer your holding with no change to these rights, which are also inheritable. Now there's something to leave the children...

BioWillie

From Chemicals to Country and Western, we cover it all

Check out BioWillie

http://www.earthbiofuels.net/

Go to press releases and look for BioWillie

Good to see some consumer advertising in the chemicals industry

EuroChlor, the part of Cefic which represents the chlorine sector has decided it is going to tell the 40 000 people who live in Brussels, Belgium and work at European insititutions about the products that chlorine makes possible through three stylish posters. They feature an astronaut with a polycarbonate vistor, polyurethane shoes and solar panels. None of these things contain chlorine, but you couldn't make them with out it.

If you're not in Brussels and would like to see the pictures click on these links:

Astronaut

Montaineer

Solar Panels

Bayer and Schering

Given that on the 6 of March Bayer had declined to say if it were interested in any generic pharmaceutical  businesses at its Annual results press conference. I wonder how much of its interest in Schering (last Thursday night) could be ascribed to flexibility, how much to opportunism and how much to good old lack of choice. Never ones to look a gift horse in the mouth, the supervisory board of Schering has decided to back the management board's decision  that Bayer would be a better home than Merck KGaA* who earlier expressed an interest. Something about family controlled firms I guess. Of course Bayer was probably forced into the move once Merck KGaA made the offer; it would have looked even smaller in the world's pharma rankings.

*Not to be confused with the other Merck a US drug company...

Taxonomies and lists

Sorry I've been so quiet for so long, we've merged Asian Chemcial News and European Chemcial News in to ICIS Chemical Business, and would you believe it this means more actual slogging-away-at-filling-the-pages work for yours truely. I've also got quite heavily into podcasting (check out ICIS radio on the web). But that extra effort hasn't entierly dammed the rich vein of office flippancy that is a constant source of comfort to me.

For example, if you look at the BASF corporate report 2005 on about page 10 you will see the executive board of The Chemical Company, either walking towards you (Reservoir Dogs style (I'm sure the resemblence to any of the charcters in that excellent film is limited to the equivalent sharpness of their dress)or getting ready to dance the Can-Can, the choice is yours, but they're out of step, for what it's worth.

I'll be working on a taxonomy of chemical industry jobs in the coming months inspired by this.

pip pip

Thomko Petro Chemical Blog

I came across the Thomko Petro Chemical Blog about the American energy supply and petrochemcials business, the other day. I'm going to be watching it to see where it takes us. Thomo's talking about China and also about US Natural gas costs...

To the limits of detection...

I  couldn't resist this...

AP
Chemical Traces Found in Bottled Water
Thursday January 12, 1:05 pm ET

BASF makes a play for Engelhard

BASF has decided to do something with the money sitting in its balance sheet, and is making a $4.9bn play for Engelhard, the US speciality company (see story page 4).

Englehard has rejected the offer. This looks smart to me. Saying ‘no’ forces BASF to show Engelhard’s management and shareholders that it is serious. The longer it takes, the more expensive it gets for the prospective buyer, and if Engelhard is lucky and manages the situation properly, we might get a tasty bidding war. (Happy days for tired hacks like me).

If this doesn’t happen, BASF’s comments about how easy it would find funding the purchase from cash flow, presumably designed to scare off others and assure ratings agencies, will give Englehard management heart that they can squeeze a little more out of our friends from Ludwigsafen. The Engelhard board would be failing in its fiduciary duty to shareholders if it rolled over right away and had its tummy tickled.

Some people have been surprised that BASF is making a hostile bid. I think this misses the point. Big companies like to say they think global and act local. Here BASF seems to be doing just that. It is taking a global perspective, but acing forcefully in the US where contested takeovers are not uncommon. BASF does not claim to be the German Chemical company; it sees itself as The Chemical Company. I'll be watching to see if BASF can pull it off.

Have you checked out my podcast recently

      I was just thinking that if you like this sort of thing, you should check out my podcast...  You can find it under the ICIS radio link on the right hand side of the page. Or click here

Grasping Nettles

Boston Consulting has suggested that Degussa might like to sell construction chemicals division and restructure its business so that they report directly to a slightly expanded board. There will be no redundancies with this plan.

Question is: are they fudging it? As a shareholder, I'd like to see the company take the decisions that will maximise my investment. I guess that's why the majority owners RAG  insisted on Boston Consulting coming in to tell the management what they should do.

Although I don't understand quite why they'd need to go through this rigmarole and to this expense. If you own the piper (or most of him) then you tell him what to play, then, he smiles politely and gets on with it.

They're moving from 20 to 17 divisions grouped into four reporting segments and seven geographical regions. Heaven knows what kind of 4d matrix they were using before if this is simplified.

But no jobs are going. It is probably unfair to say that jobs never go in Germany, but if this report had been commissioned by a US firm, you could almost guarantee they'd be losing a layer of management. Look out for early retirements.

For the key points of the story read European Chemical News 19 December issue, or watch ICIS news, the rolling chemicals news service.

Lanxess's fat cows go to the gym

Sorry it’s been so long, work does get in the way. But today I’ve managed to squeeze a few quiet moments to think about the ICIS Finance and Investment Conference that I’ve just been to.

For me the highlight was Mattias Zachert, CFO of Lanxess. I’m easily impressed I guess,  but to hear him describe a third of his business as ‘fat cows’ which ‘need to do gym’ if they’re going to make the grade to stay in his firms was music to my ears.

He painted a pretty damning picture of management at Bayer, though. Lanxess was spun out of Bayer earlier this year. He said that under Bayer, the business that formed Lanxess had little management attention. The asset allocation was, he said, on the basis of businesses ‘shouting loud enough.’ Having created the mess, Bayer decided to spin it off, rather than deal with it itself.  ‘We are the loser in this industry,’ he added speaking of Ebitda margin.

The firm has a challenging schedule to turn this around and will be helped by shifting 1000 jobs in Germany. A good number of these are protected under an agreement Bayer signed with the German Chemicals trades union. A classic piece of Bayer management failure. More jobs will go in future he added but not at the rate, he said.

For the future, he’d settle for a bbb credit rating and will dream of investment grade status, but not for next year…

We've had Gold Finger, Copper Finger, what about Plastic finger?

There's an Entertaining story in today's Times and Financial Times about a Chinese trader on the London Metals Exchange. Liu Quibing who according to the FT sold between 100 000 and 200 000 tonne of copper that he did not own, on behalf of the Chinese government. Li Qui may (or may not) have disappeared and he may (or may not) be back at work. Reports are contradictory and vague (welcome to rolling news). Whether or not China will have to ante up the 100 000 or 200 000 tonne of copper is an interesting prospect. Should each reader of this post a 1pence/1cent/1ore coin to their local Chinese embassy as a way of filling the copper gap and showing solidarity with the world's most populous country?

In the real world though, the copper price fell by over 2% and then rebounded. Good news for traders but bad news possibly for people for at least half of the market players involved in deals.

How soon before this happens in linear low density polyethylene or polypropylene... I don't imagine that either Ian Flemming or the Broccoli brothers could turn Plastic Finger into anything more interesting than a prosthetic digit.

Democracy In action

If you want to follow the European Parliament's Reach debate blow by blow... ringside seats are available at

http://europa.eu.int/comm/avservices/ebs/schedule.cfm?date=11/17/2005

From Thursday

There's meaning here somewhere...

A senior excutive at a US chemicals firm said this the other week.

"Decisions are now being made to adjust the business model and mission for each of these businesses. Over the next 18 months, required changes in cost and capital deployed will be implemented to support those shifts and ensure all businesses are maximizing their contribution to shareholder value."

Click on Comment below to leave your suggestion of what he meant to say in 10 words or less.