Hercules, Lehman Brothers launch CP Kelco
Hercules Incorporated (Wilmington, DE) and Lehman Brothers Merchant Banking Partners II L.P. have finalized their joint-venture agreement to form CP Kelco ApS, a new business serving the worldwide food, personal care, oil and other industries. Lehman Brothers' partnership owns about 71% of CP Kelco; Hercules owns the remaining 29%.
The joint venture will be based in Wilmington, DE and will combine the Hercules Food Gums Div. and the Kelco Biogums unit of Pharmacia Corp. It will serve more than 2,500 customers in about 140 countries and has principal manufacturing sites in Denmark, Germany, Brazil, UK, the Philippines and the U.S. CP Kelco supplies xanthan gum, pectin and carrageenan—used to enhance and stabilize a variety of products, including salad dressings, jams and jellies, and dairy products.
"This joint venture is a key step for Hercules as we implement our strategy for generating cash to pay down debt and strengthen our financial structure," said Vincent Corbo, Hercules chairman, president and CEO. "CP Kelco not only creates a world-class business, but allows us to monetize our Food Gums asset so that we can move ahead with our plan to focus on growing our core businesses."
CP Kelco's senior management team will be led by Harry Tucci, a former Hercules senior executive. Jerome Hunter, previously VP and GM of Hercules' FiberVisions subsidiary, is CFO.
"The combination of the Hercules Food Gums Div. and Kelco's Biogums unit is a superb strategic fit that brings together two market-leading companies with complementary product lines, technologies, geographies, customers and end-user markets to create the global leader in the steadily growing hydrocolloids market," said Tucci, new chairman and CEO of CP Kelco.
In addition to revenue enhancement opportunities, CP Kelco expects to achieve significant cost savings through scale efficiencies, eliminating redundant operations and a continued focus on reducing manufacturing, sales and marketing costs.
Edited by Scott Hegenbart