Specialty chemical company Ashland announced Tuesday that it plans to buy chemical manufacturer International Specialty Products in a $3.2 billion all-cash deal.
Chairman and chief executive Jim O'Brien told analysts during a conference call that the acquisition adds a greater presence in "higher growth markets" for Covington-based Ashland.
ISP, which is privately owned, specializes in chemicals for markets that include personal care, pharmaceuticals and energy.
"What this transaction demonstrates today is we're going to put our money where we have the best opportunities, the highest growth and the highest performance," O'Brien told analysts. "That's where the investment is going to take place."
In 2010, ISP had $1.53 billion in sales and $263 million in operating income.
Ashland expects to save $50 million annually by the second year after the deal by eliminating redundancies and seeking other efficiencies.
The purchase will strengthen the company's patent portfolio and its team of researchers, as ISP has more than 400 active patents and about 275 scientists globally, executives said.
O'Brien said Ashland and ISP have complementary products. For instance, ISP makes chemicals that are fixatives for hair gels and hair sprays, while Ashland produces shampoo thickeners and conditioners.
ISP's North American manufacturing sites include one in Calvert City, in Western Kentucky.
The transaction is expected to close before the end of the September quarter.