American Chemical Corporation
Introduction:
1) This report considers the potential purchase of the sodium chlorate producing plant in Collinsville, Alabama by Dixon Corporation from American Chemical Corporation in October 1979. The reason for this stems from the fact that American Chemical Corporation was attempting at the time to buy a controlling stake in Universal Paper Corporation, but the management of Universal contested this on the basis that it would be anti-competitive, given that they were both producers of sodium chlorate. The US government supported Universal in this belief and in order to prevent court action American had to agree to divest its sodium chlorate producing plant in Collinsville, Alabama. As of October of 1979 Dixon has agreed to purchase the plant in principal, and is awaiting approval from their board of directors.
2) Sodium chlorate is produced via the electrolytic decomposition of salt, water and energy. The important factors for us to consider regarding sodium chlorate is where the demand for this chemical comes from. 85% of demand for the product is derived from the paper and pulp industry, where it is used in the production of the bleach that is used to whiten the paper. The remaining 15% comes from its use as a soil sterilant, in uranium mining and in the production of other chemicals.
3) Dixon Corporation are the potential buyers of the plant. They are a specialty chemicals company who follow a strategy of supplying products to the paper and pulp industry. The majority of their custom comes from the South-Eastern area of the United States. In recent years they have experienced strong growth.
4) The Collinsville Plant that is the subject of this report is located in the Northern reaches of the state of Alabama in the South-East of the US. It sources its power from the Tennessee Valley Authority. It produces sodium chlorate with a maximum capacity of 40,000 tons per annum. Throughout the period 1974-1979 the plant has been consistently
1) This report considers the potential purchase of the sodium chlorate producing plant in Collinsville, Alabama by Dixon Corporation from American Chemical Corporation in October 1979. The reason for this stems from the fact that American Chemical Corporation was attempting at the time to buy a controlling stake in Universal Paper Corporation, but the management of Universal contested this on the basis that it would be anti-competitive, given that they were both producers of sodium chlorate. The US government supported Universal in this belief and in order to prevent court action American had to agree to divest its sodium chlorate producing plant in Collinsville, Alabama. As of October of 1979 Dixon has agreed to purchase the plant in principal, and is awaiting approval from their board of directors.
2) Sodium chlorate is produced via the electrolytic decomposition of salt, water and energy. The important factors for us to consider regarding sodium chlorate is where the demand for this chemical comes from. 85% of demand for the product is derived from the paper and pulp industry, where it is used in the production of the bleach that is used to whiten the paper. The remaining 15% comes from its use as a soil sterilant, in uranium mining and in the production of other chemicals.
3) Dixon Corporation are the potential buyers of the plant. They are a specialty chemicals company who follow a strategy of supplying products to the paper and pulp industry. The majority of their custom comes from the South-Eastern area of the United States. In recent years they have experienced strong growth.
4) The Collinsville Plant that is the subject of this report is located in the Northern reaches of the state of Alabama in the South-East of the US. It sources its power from the Tennessee Valley Authority. It produces sodium chlorate with a maximum capacity of 40,000 tons per annum. Throughout the period 1974-1979 the plant has been consistently