ChemConnect Acquiring CheMatch

Rival e-marketplaces combine customer bases, offer increased liquidity

Tempe, AZ  January 14, 2002  Online chemicals marketplace ChemConnect has agreed to buy rival CheMatch, an Internet exchange for bulk commodity chemicals, polymers, feedstocks and fuel products.

The two companies, both privately held, did not reveal terms of the deal. The two companies' boards have already approved the acquisition, with shareholder and regulatory approval processes due for completion by the end of February.

A statement from ChemConnect said the two e-marketplaces handled a total of some $4 billion in transactions in 2001. With these transactions set to flow through one company, ChemConnect says that the marketplaces' combined customer base will benefit from increased liquidity.

ChemConnect CEO John Robinson will retain that post in the combined company, which will maintain the ChemConnect moniker. Corporate headquarters will move from ChemConnect's San Francisco home to CheMatch's base of Houston, Texas.

"By concentrating liquidity, negotiation tools, fulfillment services and information in one place, we are making it much easier for buyers and sellers of chemicals and plastics to accelerate their adoption of e-commerce," Robinson said.

"The combination of ChemConnect and CheMatch delivers increased value to Dow and should to other buyers and sellers of chemicals and plastics as well," said Andy DuPont, global director for electronic channels at Dow Chemical Co. "With increased focus and liquidity in areas such as commodities trading, it should facilitate greater utilization at Dow and ultimately increase adoption within the industry."

Commenting on the acquisition, John Moore, a vice president at technology research firm ARC Advisory Group, noted that the past 18 months have seen the demise of numerous attempts to establish a foothold in the online chemical marketplace. "While Chemconnect is now the established leader, it remains to be seen if their business model will ultimately prove profitable," Moore said. "The coming year will determine its long-term fate."

ChemConnect was founded in 1995, while CheMatch was set up in 1997. In June 2001, ChemConnect acquired Envera, a supplier of supply chain solutions to the chemical industry.