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End to takeover battle at Hercules


After a heated tug of war with the board, the man who last year took speciality chemicals company ISP private has abandoned efforts to gain control of US chemicals company Hercules.

Sam Heyman - described by many as a 'corporate raider' - resigned as director on the board after a four-month proxy contest to control the company. The battle saw Heyman squaring up to the chief executive and chairman of Hercules William Joyce, who was brought in in 2001 to turn the company around after a series of losses.

Through his acquisition of alginates producer ISP last year, Heyman gained a 9 per cent stake in Hercules. In 2001, he won a proxy fight providing him with four dissident seats on the Hercules board. In this latest proxy contest he tried to win another four seats, which would have put him in charge of the 13-member board. A proxy fight is an attempt to convince shareholders to install new management that may be more open to a takeover bid.

But the battle ended recently when Heyman withdrew his board candidates and resigned as director, saying he had no further plans to pursue Hercules. Three of his allies on the 13-member board also resigned.

Hercules is one of the world's largest producers of food grade methylcellulose (MC), hydroxypropyl methylcellulose (HPMC) and carboxymethylcellulose (CMC) - ingredients used, among other applications, to improve adhesion in batters.

Wilmington-based Hercules is also heavily involved in xanthan gum, pectin and carrageenan through its thick 29 per cent slice in the joint venture CP Kelco. The company, already a global leader in xanthan gums, was formed in 2000 through an agreement with equity fund Lehman Brothers who took a 71 per cent stake and Hercules the rest.

Based in the same town as Hercules, CP Kelco was created from Monsanto's Pharmacia corporation's Kelco biogums business and Hercules's food gums operations. Formerly called Copenhagen Pectin, CP Kelco Denmark serves as CP Kelco's European headquarters.

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