Question-and-Answer Session
Operator
Thank you. (Operator instructions) The first question comes from Mike Harrison with First Analysis. Your line is open.
Michael Harrison – First Analysis
Hi, good morning.
Sallie Bailey
Good morning, Mike.
Jim Kirsch
Good morning, Mike.
Michael Harrison – First Analysis
I was hoping that you could walk me through the rationale for the Fine Chemicals divestiture. And also kind of curious if you could talk about what happened that made you decide to accept the lower price. As I look back historically, you guys tried to sell the plastics business and the buyer ended up cutting the price I know you walked away from that deal. So what made this different when the price was reduced?
Jim Kirsch
Okay, Mike, this is Jim. The – first of all, I’ve said for sometime that if you look at strategically where we are trying to go, where are trying to build sustainability as company it’s around a couple of key competencies where we believe we win in the marketplace. And those are around particle engineering. We – if you look across our Electronic Materials and Inorganics businesses they clearly give us competitive advantage. Those also are around our Color and Glass science capability and then formulation and application know-how at our customers’ place of business. We said for sometime that we are running the Organics businesses for cash and preserving the franchise. And the Fine Chemicals business, which we’ve built up over the last years into a good business in terms of margin and good business in terms of profitability, however, it doesn’t fit in our view long term where we are trying to go as a company. And second, the amount of capital we felt was needed to get that business to the size where it would move the needle for the company long term was better placed in businesses that we thought we get greater competitive advantage and greater value for our shareholders. So, strategically, that’s the rationale behind the sale.
With regards to price, at the end of the day every buy-sell is a negotiated activity. There was a substantive change in the world in terms of the economics of the world when we entered into that agreement as opposed to when we finalized that agreement. There is no question that the economic environment is significantly worse in October than it was when we entered into that agreement in the August timeframe. And fundamentally, at the end of the day we felt that the offering price – and our Board felt the offering price on a multiple and on a fairness basis was appropriate. So, we entered into and completed the negotiation.
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