Arco Chemical Co. of Philadelphia based subsidiary of Atlantic Richfield Co. plans to sell up to 19.6 percent of its stock to the public.
The offering is expected to raise about $430 million to $500 million, depending on demand for the shares.
Arco Chemical filed a registration statement with the Securities and Exchange Commission yesterday setting forth the terms of the offering. According to the document, Arco will offer 17 million shares of its stock at an expected price of $26 to $29 per share. The company has granted its underwriters an option for an additional 2.55 million shares to cover over- allotments.
Goldman Sachs & Co. and Salomon Bros. Inc. will serve as managers of the offering. A portion of the shares also are being offered in Europe.
By going public at this time, Arco appears to be taking advantage of a strong market to get the shares of chemical companies, according to industry analysts. The chemical industry has rebounded strongly from its problems of the last few years, as the Profits appear to be headed for a record this year & the shares of more than few companies are selling at all-time highs.
The timing of the offering “may be motivated more than anything else by the attitudes on Wall Street” according to Mr Charles Brennan of Kline & Co. a Fairfield, N.J., consulting firm that is specializes in chemical industry. Four other chemical firms also have gone public since late last year & their shares have been appreciated substantially.
In a few years, conditions for selling stock publicly may not be nearly as advantageous as it is now, Mr Brennan said. The business of chemical is still cyclical, and the nearly ideal operating conditions of the industry is enjoying may not last, he said.
A spokesman for Arco Chemical said the company has earned $70 million on the sales of $1.9 billion in last year. For First Quarter of 1987, the company has earned $61 million on sales of $449 million.
The figures represent an enormous number of improvement from 1982, a bad year for the entire chemical industry, when Arco earned only $11 million.
Arco Chemical Co. said proceeds from the offering will be used for corporate purposes only, including additions to assets, financing of joint ventures and payment of dividends.
Though Arco Chemical Co. is based in Philadelphia, the company announced last year that it plans to move its headquarters to its new research center may be in Newtown Square. The firm still maintains executive offices in the Centre Square complex but many of the employees has already been shifted to the 312-acre research complex in Delaware County.
The company employs about 800 people in the Philadelphia area and another 2,000 worldwide.
Though formed 21 years ago, Arco Chemical is the descendant of a firm which is founded in Philadelphia in 1870. That year, Atlantic Refining Co. established for the operations along with the banks of the Schuylkill near a site which is in South Philadelphia that later became the Atlantic refinery. One of the main predecessors of modern company has began marketing of chemicals in the 1920s.
Atlantic Refining Co. eventually has became Atlantic Richfield Co. which is now based in Los Angeles. The parent company established Arco Chemical Co, as an separate business unit with the headquarters in the city in 1966.
Two years ago, Atlantic Richfield withdrew from the marketing petroleum products in the main eastern United States.