ChemConnect Acquires CheMatchChemConnect Acquires CheMatch

The chemicals and plastics industry's two largest electronic trading exchanges are merging into a single exchange expected to handle more than $4 billion in trades in 2002. ChemConnect Inc. Thursday announced it has acquired CheMatch in a stock-for-stock transaction. The value was not disclosed.

ChemConnect CEO John Robinson, who will serve as CEO of the combined company, says combining the capabilities of ChemConnect and CheMatch will attract more buyers and allow the privately held company to become profitable by the end of the year. "Even though Enron Online was just beginning to trade in chemicals and plastics, their inroads there, as well as the success of ChemConnect and CheMatch, proves commodities buyers want to trade online," says Robinson. "With this merger and the demise of Enron, we are positioned as the major platform."

The exchange, whose investors and customers include 50 of the largest chemicals and plastics companies, plans to continue managing chemicals and plastics trades as well as commodities like feedstocks and fuel products previously offered by CheMatch. Lehman Brothers Inc. senior vice president Sergey A. Vasnetsov says ChemConnect and CheMatch customers will benefit from the combined services offered by the exchange, which relies on subscription and transaction fees to generate revenue.

Headquarters for the exchange, which will retain the name ChemConnect, will move from San Francisco to Houston, CheMatch's current headquarters. ChemConnect currently employs 115 and CheMatch employs 45. Robinson says that staff will be cut to about 80 employees. Larry McAfee, CheMatch's current president, will not remain with the exchange once the deal receives formal shareholder and regulatory approval, which is expected by the end of February. The boards of both exchanges have approved the deal.