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Cabot buying Norit for $1.1 billion

Thursday - 6/21/2012, 10:56am  ET

AP Business Writer

NEW YORK (AP) - Chemical and specialty products maker Cabot Corp. is buying the Dutch company Norit NV for $1.1 billion in order to strengthen its specialty chemicals portfolio.

Norit specializes in activated carbon products, which are used in environmental protection, air and water purification, food and beverages, pharmaceuticals and catalysts. The Netherlands-based company has 10 manufacturing plants located throughout Europe and the Americas and 760 employees.

Boston-based Cabot is buying Norit from affiliates of Doughty Hanson & Co. Managers Ltd. and Euroland Investments BV.

"This acquisition supports the ongoing transformation of our portfolio to a higher margin, less cyclical, specialty chemicals focused company," Cabot President and CEO Patrick Prevost said.

In an interview with The Associated Press, Prevost said that the active carbon market is growing at a rapid pace as environmental concerns increase.

While Norit already has a strong foothold in Europe and North America, Prevost says the Cabot deal will give Norit access to the resources needed to tap into emerging markets.

Norit will continue to be led by CEO Ronald Thompson.

The acquisition is expected to add 20 cents to 25 cents per share to fiscal 2013 earnings and 30 cents to 40 cents per share to Cabot's fiscal 2014 outlook of $4.50 per share. The estimates exclude one-time costs.

The buyout is expected to close this year. It requires the approval of U.S. and German regulators and consultation with the Dutch labor council.

Cabot said Thursday that it expects to fund the transaction with about $200 million in cash and $300 million of borrowings under an existing credit agreement. It also plans to issue about $600 million of long-term debt.

Cabot's stock fell $1.29, or 3.4 percent, to $36.68 in Thursday morning trading. The shares have traded in a 52-week range of $22.45 to $44.97 and are up 14 percent for the year to date.

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