WILMINGTON, Del. (AP) - Ashland's stock plummeted Friday after it said it would buy specialty chemicals maker Hercules Inc. in a $2.6 billion cash-and-stock deal that also includes a hefty debt load.
Ashland Inc.'s stock fell 13 percent after it announced the deal, which also includes the assumption of $700 million of Hercules Inc. debt, sparking worries that the payments would stymie growth.
"On capital spending, we're going to have to be very selective because our primary objective in the near term will be to pay down some of this debt," James O'Brien, chairman and chief executive officer of Ashland, told analysts in a conference call.
Standard & Poor's Ratings Services warned of a possible downgrade of Ashland's corporate credit rating, noting that the deal would be mostly debt-financed.
Ashland shares closed Friday at $41.10, down $6.31, or 13.3 percent. Hercules shares ended the day at $20.95, up $4.29, or 25.7 percent.
The offer represented a 38 percent premium over Hercules' Thursday closing price.