Rhodia SA to purchase ChiRex Inc. for 3.47 times revenue

Weekly Corporate Growth Report, Jul 31, 2000

The Deal: The French chemical company, Rhodia SA has agreed to buy ChiRex Inc. for $33.33 a share in a deal worth $510 million. Rhodia, the largest manufacturer of asprin ingredients, expects to start the deal in August of 2000. After news of the deal was announced, shares of ChiRex soared up $10.56 to close at $30.69.

Discussion: ChiRex Inc. provides advanced product development services and manufacturing to the pharmaceutical industry producing pharmaceuticals and other chemical products for such drug-industry heavyweights as SanofiSynthelabo, SmithKline Beecham and Glaxo Wellcome, which accounts for over 50 percent of sales. ChiRex supplements clients' in-house development and manufacturing operations as well as offering a portfolio of related services such as product analysis, development, and hazard evaluation. The majority of ChiRex products, 86 percent of which are pharmaceutical, are covered by secrecy agreements that restrict use and naming of customers and drugs. The company also operates a technology center in Boston.

Rhodia SA is a leading maker of specialty chemicals. Its polyamide unit makes yams, fibers, and engineering plastics used in cars, apparel and home furnishings. Rhodia's consumer and industrial specialties chemicals are used in food, makeup, detergent, tires and house paint, and for metal treatment, agriculture and oil field operations. The company's fine organics unit makes life science chemicals and ingredients for pharmaceuticals and fragrances. Rhodia's other recent acquisition was the phosphate specialist, Albright & Wilson.