Dover Chemical Corp. announced yesterday that it has acquired the Keil Chemical Division of Ferro Corp. The transaction unites the two largest North American producers of chlorinated paraffins and sulfurized fats and oils.
Rumors of the deal have circulated for several months, raising concerns among blenders of metalworking fluids about the elimination of competition for the supply of chlorinated paraffins. Dover and Keil claim nearly all of the market for these additives, which are used to provide extreme pressure protection in cutting fluids.
But an industry representative predicted Dover will not gain too much control over the market, thanks to stepped-up imports by European producer Ineos Chlor.
At first, I was very concerned that Dover would have what amounts to a monopoly, said Eastern Oil Co.s Catherine C. Novak, chairman of the Metalworking Lubricants Committee of the Independent Lubricant Manufacturers Association. But since then Ive talked to [Ineos], and theyve made it clear that theyre going to become much more active in the market. I think now that theres going to be adequate competition.
Officials at Ineos Chlor could not be reached for comment. The company, which is based in Runcorn, England, manufactures chlorinated paraffins there and in Baleycourt, France. It is a subsidiary of Ineos, which is based in South Hampton, England.
Pioneer Chemical also produces chlorinated paraffins at a plant in Canada.
Keil employed approximately 120 people, most of them at the divisions plant in Hammond, Ind. In addition to chlorinated paraffins, it manufactures sulfurized fats and oils used as extreme pressure additives and pour-point depressants.
Keil marks the latest in a series of acquisitions for Dover, which is based in Dover, Ohio, andis wholly owned by ICC Industries of New York. Most recently, in December Dover acquired BP Castrols Mayco Chemical Corp., which ranked behind Keil as the nations second-biggest sulfurized additives producer.
That transaction did not include manufacturing facilities. According to industry sources, BP Castrol agreed to continue making Maycos products for one year. Sources speculated that the need for permanent manufacturing capacity spurred Dover to acquire Keil and that Mayco production activities may be moved to Hammond.
Dover officials declined to comment yesterday.
Novak said she was less concerned about Dovers share of the sufurized additives market than its dominance in chlorinated paraffins. First of all, she noted that Cleveland-based Elco Corp. is already recognized as a supplier of sulfurized additives. Rhein Chemie, in Trenton, N.J., is also asupplier. In addition,Novak suggested that a few companies concentrating on other products may also become suppliers of sulfurized additives.
I believe that if I looked hard, I could find a few other companies that are making them as ancillary products, she said.
Dover released no information on the terms of its acquisition. Ferro has not issued a statement, and a company spokesmandeclined to comment.