Rohm and Haas shareholders have approved proposals which will create a $6.5 billion specialty chemical company later today after appropriate legal filings are made to complete the acquisition of Morton International, a Chicago-based manufacturer of specialty chemicals and salt.
``This is a remarkable day for Rohm and Haas,'' said chairman and CEO Lawrence Wilson at the company's annual meeting of shareholders in Philadelphia. ``By the end of this day, Rohm and Haas will have a market capitalization, revenues and level of profitability that place us among the world's top three specialty chemical companies.''
Rohm and Haas announced its intention to acquire Morton International on February 1st of this year for a combination of cash and stock totaling $4.9 billion.
Morton's specialty chemical products are found in food packaging, computer circuit boards, car finishes and furniture coatings, among other things.
Rohm and Haas shareholders approved an increase in the number of common shares from 200 to 400 million, and to use a portion of those shares for the acquisition. In Chicago this morning, Morton shareholders also voted to approve the acquisition.
Once appropriate legal papers are filed in the state of Delaware and Indiana, Rohm and Haas will give $24.55 in cash and .368776 of a share of its common stock for each Morton common share.
President Michael Fitzpatrick reiterated the new Rohm and Haas's intention to grow faster and become even more efficient. ``As separate companies, Rohm and Haas and Morton had the capability to increase sales revenue at above GDP rates -- in the 4 to 5% range. As a combined company, you can expect us to report sales growth in the 6 to 8% range, beginning in 2001, as long as economic conditions remain stable.''
Fitzpatrick also committed the company to a $300 million reduction in operating costs by the end of next year. He said the bulk of the savings would come from infrastructure adjustments, more efficient raw material and packaging purchases, and improvements in the company's manufacturing network.
Vice Chairman Rajiv Gupta, assured shareholders that the new company is well positioned to take advantage of the globalization and specialization trends dominating the industry today.
He pointed out that the combined Rohm and Haas will begin with operations in 25 countries, with good manufacturing, technical services, selling and distribution channels firmly established in all four geographic regions. While more than 80% of the company's sales occur today in North America and Europe, Gupta stated, ``We have the perfect entree routes to quickly bring the acquired technology and products into Latin American and Asia-Pacific countries.''
The quality of the new company's product portfolio is excellent, according to Gupta, with ``more than 90% performing at or above target levels.'' However, he said, having a high-performance product portfolio is not enough. ``Companies today must focus on specific areas of expertise and then exploit those capabilities everywhere they can.''
Also at the shareholders meeting, Larry Wilson, who had previously said he would retire before the end of the year, set a retirement date of September 30th. Wilson said, ``By that time, the new management team will have been in place for about a year. Mike Fitzpatrick and Raj Gupta [who will succeed Wilson as chairman of the company] have already proven themselves as outstanding leaders of this group -- clearly they are delivering superior results.'' Gupta paid tribute to Wilson, noting among other things that Rohm and Haas's total return to shareholders has been 460% since Wilson became chairman in July 1988 -- far outstripping the average performance of specialty chemical companies during that time.
In other actions at the meeting, Rohm and Haas shareholders approved a new stock plan for the company and amended the company's charter to require that all future stockholder-proposed actions be taken at shareholder meetings. Shareholders also approved the company's 15-member slate of directors that, for the first time in more than a decade, includes two members of the Haas Family. David Haas and Thomas Haas joined the board as representatives of the company's largest shareholder group. Once the Morton acquisition is completed, three Morton directors will join the Rohm and Haas board -- Jay Stewart, chairman and CEO of Morton International, James Cantalupo, vice chairman of McDonald's Corp., and Richard Keyser, chairman and CEO of W. W. Grainger, Inc.