Thats the expectation behind the merger of Crompton Corp. and Great Lakes Chemical Corp., a deal which should be finalized next month if regulators give the required blessing. In March the two agreed to marry and create one of the largest specialty chemical companies in the United States, with combined annual revenues of $4.1 billion. The merger, valued at $1.8 billion, will be a straight stock swap, putting Crompton shareholders in possession of 51 percent and Crompton Chairman, President and CEO Robert L. Wood at the tiller of the new company.

Both companies have operations in plastic additives and polymers, and each has an extensive and profitable line in lubricant additives. Cromptons Petroleum Additives business supplies aminic antioxidants sold under the Naugalube brand, as well as high-viscosity polyalphaolefins, antiwear agents and sulfonates, plus lubricating grease. Its additive components are used in formulating motor oils, transmission fluids, industrial and hydraulic oils and metalworking fluids.

Great Lakes Chemicals primary products for the lubricants industry mostly sail under the Durad flag, and include phenolic antioxidants, flame retardants, and triaryl phosphates that are used as antiwear and extreme pressure additives in metalworking fluids. The Indianapolis based company also offers fire-resistant hydraulic fluids and lubricants.

With little duplication in the two companies lube additive product lines – especially in the high-growth area of antioxidants – their reach together should extend further into the lubricants market than either has alone. Already, the two claim to have 12 percent of the market for petroleum additive components.

The new company will be headquartered at Cromptons home in Middlebury, Conn., and its unclear whether Crompton will change its name post-merger. But even before the merger was contemplated, Crompton had been weighing its assets, deciding which to keep and which to divest, observes Janet Mann, Cromptons vice president for Petroleum Additives. Petroleum Additives, she adds, was definitely a keeper – a profitable business with good economic drivers and appealing potential.

Petroleum Additives is one of four business groups in Cromptons Specialty Chemical area, Mann told LubesnGreases last month. It is definitely a business Crompton wants to grow and invest in. The segments revenues are not broken out from Cromptons total $1.5 billion in specialty chemical sales, but a presentation by CEO Wood in December hints at its luster: Petroleum Additives is highly profitable, he told investment analysts, with EBITDA margins of 20+ percent.

Leading the pack for Petroleum Additives – and prompting the Geismar expansion – are Naugalube alkylated diphenylamine (ADPA) antioxidants. John Dennerlein, global marketing director for antioxidants and PAO, points out that there are just a few components available to fight oxidation in engine oils. Zinc dialkyldithiophosphate (ZDDP) is one of the best known, and offers anti-wear protection as well. But automakers are curtailing the use of phosphorus and sulfur as emissions mandates become stricter, and ZDDP contains both. So ZDDP use is being cranked back and ashless technologies like ADPA are gaining favor, because they contain no heavy metals that can combust and be exhausted out the tailpipe.

ADPA is seeing significant growth, in the crankcase arena particularly, said Dennerlein. We saw demand increase dramatically from 2003 through 2005. Overall requirement for ADPA antioxidants went up 40 to 50 percent, although going forward we think it will be more in the 5 to 7 percent range annually.

The ILSAC GF-4 passenger car engine oil specification approved last summer required greater doses of antioxidants, he continued, and PC-10, the proposed heavy-duty diesel engine oil category due to hit the market next year, can also be expected to require a boost in ash-free antioxidancy. Its not entirely clear what the increase in demand may be for PC-10, or what the size of the treat may need to be, but were keeping a finger on that market, Dennerlein said.

ADPAs are ashless, have low volatility, and good thermal stability. Thats important as engine temperatures get hotter, explained Cyril Migdal, the companys director of lubrication science and tribology. They last quite a while and are very effective mechanistically. Some additives decompose quickly in engine oil formulations, but ADPAs actually have the ability to regenerate themselves over and over, he said. That means that as an antioxidant, they dont just stop one radical, but can trap many, many radicals before theyre used up.

The treat rate varies with the specific applications, but generally its true that treat rates have gone up, Migdal confirmed. Beyond the driveline, ADPAs are seeing use in turbine oils, hydraulic fluids, gear oils, greases, even some heavy industrial applications, he said, alone or in combination with other antioxidants. And demand is growing in Europe and Asia as well as North America.

Luckily, Geismars new ADPA capacity is right on schedule for July completion, Mann said. Its not the only arrow in the quiver, either. We have five plants that can make ADPA – Elmira, Ontario; Latina, Italy; Kaohsiung, Taiwan; Rio Clara in Brazil; and Geismar. Weve been adding to Elmira for a number of years, and some expansions also have been made to Latina, Mann pointed out. Elmira is actually our largest plant for making ADPA, and the most flexible. And we also expanded the plant at Kaohsiung, Taiwan, last year.

Geismar represents a multimillion dollar investment, she went on, capital dollars which were leveraged by converting existing equipment once used to make rubber chemicals to ADPA production. Geismar is a vertically integrated site, with its feedstock material – diphenylamine, DPA – coming from another Geismar plant operated by Rubicon, a Crompton-Huntsman joint venture. Mann indicated that there is plenty of DPA capacity to supply Cromptons needs, even after the expansion, for many years to come.

Were in good position for feedstock supply, Dennerlein judged, and weve been able to meet our needs over the past several years. Were not concerned about supply – but we are concerned about price, he conceded. The company had to impose several price increases in the second half of last year – as did many chemical additive suppliers – in response to steep cost increases for building block chemicals such as benzene, ethylene and propylene.

One step Crompton is taking to control costs – mirroring an action also taken by other lube additive suppliers – is to move smaller customers to distribution, rather than handling such accounts directly. Specialty chemical distributor ChemPoint, based in Bellevue, Washington, near Seattle, is taking over the distribution of products to smaller customers in North America, and also in Latin America and Europe. By using ChemPoint, these customers can be serviced on a superior basis, Mann said, while we also make our operations as efficient as possible and become more competitive in the world.

The plan is for ChemPoint.com to purchase Crompton products in bulk and then sell the products to customers. This will reduce costs as ChemPoint – an e-distributor of specialty chemicals and a subsidiary of chemical distribution giant Univar – assumes the responsibility and expense of tracking and billing smaller orders, Crompton said.

ChemPoints cost to serve these customers is smaller than our cost, explained Dennerlein, and were finding that ChemPoint often is supplying many other products to the same customers, so its more efficient overall. He believes that migrating smaller customers to ChemPoint will be very positive. Since March 15, a significant number of customer accounts – in the hundreds – have shifted to ChemPoint. ChemPoints experts in the lubricants area have formulation expertise, and we trained them on all our components for lubricants and fuels, Dennerlein added. Also, ChemPoints experts will have access to Cyril Migdals group in Middlebury, and so theyll be able to service customers on a more frequent basis.

On the technical side, Midgal adds, R&D efforts and money are focusing on creating new and better antioxidants, new detergent technologies (Were doing a tremendous amount of research on detergents.), friction modifiers and antiwear agents. We have a robust product pipeline, Migdal added, and theres support from management to build this business through product development.

And how will Great Lakes products be brought into the Crompton pipeline? Thats under review and under wraps for now, said Mann, a member of the merger integration team. Its inappropriate for me to comment until after the closing, she demurred. But it will create the third-largest U.S. specialty chemical company. Bob Woods goal, and ours, is to be the best specialty chemical company in the world.

Were very excited about the combined company.