Spotlight Interview: Dr. Gerhard Prante, Advisory Board Member ...

Inside this Issue
Welcome to the second quarter 2006 issue
of The Chemical Intermediary, a publication
of the Lincoln International Chemicals investment
banking practice.
With this issue we plan to keep you informed
about recent developments at our
firm, offer insight into the agrochemical and
crop science industries and provide statistics
and commentary regarding trends and
developments in the global specialty
chemicals industry.
Recent Announcements
Dr. Michael Witzel Appointed
Chairman of GELITA AG
Frankfurt, Germany--
Lincoln International’s
German Advisory Board
member, Dr. Michael
Witzel, will be appointed as
Chairman of the
Management Board of
GELITA AG, Eberbach,
Germany with effect
September 1, 2006.
Dr. Witzel joined Lincoln International’s
Advisory Board in Germany in 2003. He
supported Lincoln International in
successfully building up its extensive
experience in the area of food
ingredients. Dr. Witzel was previously
Executive Vice President of DEGUSSA AG
and prior to that, member of the
Management Board of SKW Trostberg AG.
In both positions he was responsible for
natural products in the areas of Food
Ingredients (Texturant Systems, Gelatine
(Rousselot), Salt (Bad Reichenhaller
Spezialsalz) and flavours), health
ingredients and feed additives.
With 2,500 employees and a turnover of
Euro 450 million, the GELITA Group is the
leading gelatine specialist in all application
sectors – food, pharmaceuticals,
photographic and specialty products. It
produces gelatine from all relevant raw
materials, on all continents and for all
applications.
Key topics covered in this issue include:
• Announcement of Dr. Witzel’s appointment
as Chairman of GELITA AG (p1)
• Transaction announcement—sale of ETI
Holdings to Dyno Nobel (p1)
• Q2 Chemicals Review (p2-3)
• Announcement regarding our strategic
partnership with China Everbright (p5)
Lincoln International
Represents Blue Point
Capital Partners in the Sale
of ETI Holding Corp. to Dyno
Nobel
Chicago, USA – Blue Point Capital
Partners, a US-based private equity
investment firm, has
completed the sale of
ETI Holding Corp.
(“ETI”), one of its
portfolio companies,
to Dyno
Nobel. Lincoln
International initiated
this transaction,
assisted in the
negotiations, and
served as the
exclusive financial
advisor to Blue Point
and ETI. The terms of
the transaction were not disclosed.
ETI’s products and customer
service enable
customers to improve
productivity and lower
project costs.
ETI, based in North Bay, Ontario, is a
leading North American manufacturer and
supplier of commercial explosive products
and blasting services for a diverse group of
blue-chip customers in the quarry, metal
and coal mining, construction, oil and gas
exploration, forestry and dredging
industries.
John Kirby, Managing Partner of Blue Point,
stated, “Lincoln International proved once
again to be a valued advisor to Blue
Point. Lincoln brought an international
Chemicals
The Chemical Intermediary
Q2 2006
In addition, on Page 4 we present an interview
with Dr. Gerhard Prante, an industry
expert, former executive in the agrochemicals
industry and a member of our advisory
board in Germany. Dr. Prante shares
some interesting views on the agrochemical
and crop science markets.
We hope that you find this issue interesting
and we welcome your comments and suggestions.
strategic acquirer to the table that was
capable of realizing significant synergies in
an acquisition of ETI.”
Blue Point Capital Partners, with offices in
Charlotte, Cleveland, Seattle, and
Shanghai, is one of the largest private
equity firms in the Southeast, Midwest and
Pacific Northwest, and principally focuses
on investments in manufacturing,
distribution and service businesses that
address industrial and consumer
markets. Blue Point has extensive
experience in identifying, evaluating and
successfully completing a variety of private
equity investment transactions, including
management buyouts, corporate
divestitures, recapitalizations and industry
consolidations. The principals of Blue Point
have completed more than 70 investments
with a total transaction value of more than
$2 billion.
Dyno Nobel is a global leader in the
commercial and explosives industry with
over 3,000 employees. Dyno Nobel
provides blasting solutions and quality
explosives products, with over a million tons
of ammonium nitrate capacity and 32
manufacturing facilities on 2 continents
(including state-of-the-art initiation systems
facilities in the United States, Australia and
Mexico), throughout North America and
Australia, as well as to selected customers
internationally. Dyno Nobel is listed on the
Australian Stock Exchange under the
symbol “DXL”.
1 Lincoln International DEALREADER Chemicals Q2 2006

Second Quarter Chemicals M&A Market Review
Commentary
On this and the following page we provide
statistics regarding transaction activity and
trading levels in the chemicals industry
through the second quarter of 2006. Overall
activity during the quarter was strong,
both in terms of the number of transactions
and deal value.
The largest transaction of the second quarter,
and of the year to date, was announced
on June 22 by Anadarko Petroleum
(NYSE:APC). Anadarko Petroleum offered
$19.1 billion for the take-over of publicly
listed Kerr-McGee (NYSE:KMG), an independent
oil and natural gas exploration and
production company.
M&A Transaction Highlights Q2 2006
BASF AG (DB:BAS) closed its previously
announced acquisition of Engelhard Corporation
for a final value of $5.7 billion. It
represents one of three large acquisitions
BASF completed in the quarter, the other
two being BASF’s acquisition of Degussa
AG’s (DB:DGX) Construction Chemicals
Division for $3.6 billion and BASF’s acquisition
of Johnson Polymer from JohnsonDiversey
Inc. for $478 million.
Other large transactions during the 2nd
quarter 2006 included the acquisition of
Dyno Nobel’s (ASX:DXL) European, Middle
Eastern, African, Asian and Latin American
Business by Orica Ltd. (ASX:ORI), an Australian
manufacturer and supplier of explosives
and mining services, for $685 million.
Date Target Status Buyers/Investors
06/22/2006 Kerr-McGee Corp. (NYSE:KMG) Announced Anadarko Petroleum Corp.
(NYSE:APC)
SOURCE: CapitalIQ, Inc. (division of Standard & Poor’s), public filings
Together with Oranje-Nassau Groep BV
the private equity firm The Carlyle Group
signed an agreement to acquire Stahl International
BV, a Dutch manufacturer of
chemicals and dyes for the processing of
leather, for $667 million. The acquisition is
subject to approval from competition authorities.
“We are optimistic of a
continued strong M&A market
for chemicals in the remainder
of 2006.”
Total Enterprise TEV/
TEV/
Value ($mm) LTM Revenue LTM EBITDA
$ 19,134.5 3.1x 7.1x
06/08/2006 Engelhard Corp. Closed BASF AG (DB:BAS) 5,679.8 1.1x 11.6x
07/03/2006 Degussa AG, Construction Chemicals
Division
05/01/2006 Koor Industries Ltd. (TASE:KOR) Announced Discount Investment Corp. Ltd.
(TASE:DISI)
06/01/2006 Dyno Nobel's European, Middle Eastern,
African, Asian and Latin American Business
05/15/2006 Stahl International BV Announced The Carlyle Group/ Oranje-
Nassau Groep BV
Closed BASF AG (DB:BAS) 3,584.7 1.5x 11.2x
1,253.0 (1) 5.0x 15.0x
Closed Orica Ltd. (ASX:ORI) 685.0 NA NA
667.2 NA NA
06/30/2006 Johnson Polymer Closed BASF AG (DB:BAS) 478.1 1.3x NA
06/20/2006 Huarun Paints Holdings Company Limited Announced Valspar Corp. (NYSE:VAL) 362.5 (2) NA NA
05/01/2006 Emerald Performance Materials LLC Closed Sun Capital Partners 270.0 0.7x NA
06/27/2006 Huntsman Corp., U.S. Butadiene and MTBE
Business
04/25/2006 Sico Inc. (TSX:SIC) Closed Akzo Nobel NV
(ENXTAM:AKZA)
Closed Texas Petrochemicals LP 262.0 0.4x 6.1x
257.4 1.1x 12.4x
(1) Represents the Implied Enterprise Value of Discount Investment Corporation’s agreement to acquire a 35.4% stake in Koor Industries
Ltd. for $443.3 million.
(2) Represents the Implied Enterprise Value of Valspar Corp.’s agreement to acquire an 80.0% stake in Huarun Paints Holdings Company
Limited for $290.0 million.
2 Lincoln International DEALREADER Chemicals Q2 2006

Key Statistics —
Specialty Chemicals
M&A Transaction Activity vs. Deal Value
# of deals
M&A Transaction by Region
Most Active Buyers / Investors (LTM) All transactions by Type (LTM)
Public
Offerings
16%
Private
Placement
18%
Buyback
11%
Public Market Performance (LTM) Enterprise Value / EBITDA
120
115
110
105
100
95
90
60
55
50
45
40
35
30
25
20
48
$2.7
36
$4.3
52
$9.5
Jul-05 Oct-05 Jan-06 Apr-06 Jul-06
1 2
LI Diversified Chems Industry LI Specialty Chems Industry S&P 500 Index
49
$12.4
$21.8
Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
# of deals Deal value
Top 10 Buyers by No. of Deals Top 10 Buyers by Deal Size
Company Name No. of
Deals
57
$25.0
$20.0
$15.0
$10.0
$5.0
$-
$ in billions
Company Name Deal Size
($mm)
Akzo Nobel NV 8 Anadarko Petroleum Corp. $ 19,134.5
PPG Industries Inc. 5 BASF AG 9,627.8
Henkel Group 3 RAG AG 4,102.7
ALTANA Chemie AG 3 Wendel Investissement 2,416.7
Hexion Specialty Chemicals, Inc. 3 Orica Ltd. 2,383.0
BASF AG 3 Kohlberg Kravis Roberts & Co. 1,709.9
Arsenal Capital Partners 2 Macquarie Bank Ltd. 1,698.0
Orica Ltd. 2 ALTANA Chemie AG 768.2
The Riverside Company 2 Oranje-Nassau Groep B.V. 667.2
SUN Capital Partners 2 The Carlyle Group 667.2
Total Top 10 33 Total Top 10 43,175.3
Total number of transactions: 341
(1) LI Diversified Chems Index: FMC, CLX, EMN, RHA, HUN, CBT, POL, ASH, DD, EC, OLN, PPG, AKZA, BAS, CE, MON, DOW
(2) LI Specialty Chems Index: Includes all companies in the Large Cap and Mid Cap groups
(3) Large Cap group includes: APD, ROH, PPG, ECL, SIAL, IFF, ARG, LZ, VAL, CEM, CYT, NLC, ALB, RPM, HPC, ROC, FUL
(4) Mid Cap group includes: SXT, OMG, MRD, NEU, ARJ, SMMX, GRA, SHLM, FOE, CBM
SOURCE for all data on this page: CapitalIQ, Inc. (division of Standard & Poor’s), Lincoln International and public filings
Merger/
Acquisition
55%
3 Lincoln International DEALREADER Chemicals Q2 2006
% of total transactions
TEV/ EBITDA
10.0x
9.5x
9.0x
8.5x
8.0x
7.5x
7.0x
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1 2 1 3 3
3
18
26
8.4x
8
10
16
8.9x
16 16
28 25
9.0x
Mar-06 June-06
7
3 4
Large Cap Mid Cap
5 8
Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
Europe USA & Canada Asia Rest of World
9.9x
24
22

Spotlight Interview: Dr. Gerhard Prante, Advisory
Board Member, Lincoln International
Dr. Gerhard Prante
joined the advisory
board of Lincoln International
Germany in
2003. Dr. Prante was
previously CEO of
AgrEvo, a Joint Venture
between Hoechst
and Schering, and
Deputy CEO of
Aventis CropScience, which was formed
through the merger of AgrEvo and Rhône-
Poulenc Agro. During his time at Aventis
CropScience he was responsible for the
sale of the company to Bayer AG for a consideration
of Euro 6.9bn. Today, Bayer
CropScience generates revenues of Euro
5.9bn and realizes an EBITDA-margin of
22%.
What do you think are the overweighing
trends in the Agrochem and Crop-
Science industry?
The global market for chemical crop protection
products is today the most significant
part of the crop science market with a total
value of approximately $50 billion. Over the
last ten years, biotechnology has been the
catalyst for the development of this market.
New traits in crops such as soybean, corn,
cotton and oil seed rape/canola, have had
a significant influence on the chemical crop
protection market. Glyphosate for example,
can be used today as a selective herbicide
in soybeans due to the genetically induced
tolerance. The herbicide tolerance trait is
also available in cotton, corn and canola. In
the first two a genetically induced insect
resistance trait is available in biotech varieties
as well.
What consequences do you see deriving
from these trends?
These biotech crops have already and will
continue to have an influence on the herbicides
used by the farmers, which will hence
lead to a change of portfolio in the herbicide
market. The insect resistance in cotton and
corn partly substitutes the use of chemical
insecticides. In 2005, biotech crops were
“The biotech crops and in particular
the crop protection input traits will
continue to grow at a rate of 8% to
10% p.a. over the next ten years.”
planted on approx. 90 million hectares
globally. The result of the acreage growth
of the biotech crops during the last 10
years has been more or less stagnating
chemical crop protection consumption. The
biotech crops and in particular the crop
protection input traits will continue to grow
at a rate of 8% to 10% p.a. over the next
ten years. For those market participants
with a primary focus on the chemical crop
protection portfolio, R&D and cost efficiency
will be decisive for their competitive
position and growth potential. Generic companies
on the other hand will potentially
enjoy more growth in the future because a
number of products that recently came off
patent have very high technology standards,
which cannot easily be surpassed
by new molecules with the same economical
value for the customers.
Monsanto just recently announced earnings
of $334 million for Q3/06 compared
to $47 million for the same period of last
fiscal year. Were you surprised by this
significant increase in earnings?
No, this did not come as a big surprise to
me. The reason is that Monsanto undertook
major acquisitions in 2004 and 2005,
e.g. the global market leader in vegetable
seeds, Seminis, Inc. Moreover, Monsanto
is the unrivalled market leader in biotech
crops. Biotech crops offer two income
streams, one based on the traits and the
second based on the performance of the
genetics. Monsanto is now harvesting the
result of some twenty years of consequent
investment in biotech and genetics. As
mentioned earlier, biotechnology is the
catalyst in forming the plant science industry.
This industry has three innovation platforms,
namely chemistry, biotechnology
and plant genetics. The driver for innovation
in this industry today is plant genetics,
which employs the results of biotechnology
in its breeding process.
What needs do you see for plant science
companies in terms of external
growth opportunities?
The reality of today is the existence of an
approx. $50 billion crop science market.
Hence the R&D-based companies will only
have the chance to participate in the growth
driven by the crop protection input traits
and the genetics if they have the assets
and the abilities to use all three innovation
platforms for new innovative products for
the farming industry. On the other hand,
those companies with a focus on chemical
crop protection products can only generate
growth if they have a very strong R&D pipeline
and at the same time are very cost
efficient. As a result we can expect further
consolidation among R&D-based companies
and further acquisition activities of the
generic companies. Likewise, further consolidation
in the biotech as well as the seed
industry will occur. One recent example is
the acquisition of CropDesign by BASF and
the seed acquisitions of Syngenta and
Monsanto during the past 24 months.
Dr. Prante, you joined Lincoln International’s
Advisory Board in Germany in
2003. What makes this activity interesting
for you?
I spent all my professional life in the chemicals
and agricultural industry, including crop
protection, animal health, biotech and
seeds. During my time as CEO of AgrEvo
and deputy CEO of Aventis CropScience, I
worked together with investment banks in a
number of M&A-Transactions. Thus, I believe
I have a good understanding for what
clients expect from their advisors. I always
had a preference for those advisors who
have a solid understanding of my industry
based on practical experience. The prospect
of working with a dynamic team of
excellent M&A bankers at Lincoln International,
combining senior operational experience
and industry knowledge with outstanding
transaction know-how, is an exceptionally
attractive one.
4 Lincoln International DEALREADER Chemicals Q2 2006

Lincoln International’s Global Footprint
Chicago
Lincoln International
Expands Reach Into Asia
New York
Chicago, USA – In April 2006, we announced
the formation of a strategic alliance
with China Everbright Limited (“China
Everbright”), which has investment banking
offices in Hong Kong, Beijing and
Shenzhen and through its affiliate, Everbright
Securities Co. Ltd., in Shanghai
(“ESCL”). China Everbright and ESCL
have over 100 investment bankers. ESCL
is the eighth largest securities firm in
China. Through the partnership, Lincoln
International will enhance its ability to reach
buyers and acquisition targets in China and
pursue joint engagements on a global basis.
With offices in Chicago, Frankfurt, New
York and Paris, Lincoln International employs
approximately 100 M&A professionals,
equally represented in the U.S. and
Europe. This new partnership with China
Everbright expands Lincoln International’s
reach in the global marketplace. The vision
of Lincoln International is to create the leading
global mid-market M&A advisory organization
by combining a strong domestic
presence in each of the key world economies
with outstanding staff and an open
and integrated working environment.
Frankfurt
Paris
“China is fast becoming one of the most
active M&A markets in the world. M&A
growth in China can be linked to a variety
of factors, including economic diversification
and the rapid expansion of China’s
private sector,” said Jim Lawson, Cochairman
of Lincoln International. “We are
delighted to partner with a firm that shares
our commitment to providing our global
clients with high-quality M&A advisory services.”
China Everbright was founded in 1983 and
is headquartered in Hong Kong and Beijing.
The firm focuses its efforts on banking,
securities and investment management
practices. With more than 10,000 employees
and an extensive network of offices
throughout China, China Everbright and
ESCL serve clients in a wide range of industries,
including power, textile, real estate,
retail and transport. Some of the
firm’s most prominent clients include Bank
of China in Hong Kong, Bank of Communications,
China Life and China Telecom HK
(renamed China Mobile).
To ensure that the benefits of the strategic
alliance are fully captured, several employees
in each of China Everbright’s four main
locations will be dedicated to working with
Lincoln International. These employees
also will be working closely with Lincoln
Tokyo*
Hong Kong*
Approximately 50 professionals in the U.S.
Approximately 35 professionals plus an
18-person advisory board in Europe
*Strategic partnerships in Japan and China
International’s offices in the U.S. and
Europe.
“Clients on three continents will benefit from
our close collaboration and experience,”
said Wang Mingquan, Chairman of China
Everbright. “The exchange of intellectual
capital, resources and contacts between
Lincoln International and China Everbright
make this valuable partnership beneficial to
our clients” to those markets.
China is an increasingly important participant in the global chemicals market, as both a consumer and a producer of
chemicals. Lincoln’s strategic relationship with China Everbright provides us with local access and in-depth insight
into that market. Such access is unparalleled among global middle market advisory firms.
5 Lincoln International DEALREADER Chemicals Q2 2006

Formation of Lincoln International
In January 2006, we announced the
formation of Lincoln International,
comprised of predecessor firms Lincoln
Partners and Peters Associates, along with
a group of experienced professionals in
Paris. Our offices in Chicago, Frankfurt,
New York and Paris employ approximately
100 M&A professionals, equally represented
in the U.S. and Europe.
With integrated resources, Lincoln
International focuses on providing merger
and acquisition services and private capital
raising to companies involved in midmarket
transactions. Lincoln International’s
integrated, industry-focused teams offer
clients the breadth of contacts and effective
cross-border coordination that previously
was not available on mid-market
transactions.
Prior to becoming Lincoln International,
Lincoln Partners and Peters Associates
enjoyed a successful partnership,
capitalizing on each firm’s complementary
culture, service and industry expertise. As
one integrated organization, Lincoln International
will enhance and build upon that
success with the addition of their experienced
colleagues from France.
“Globalization is no longer just the domain
of the largest companies or major transactions,”
said Jim Lawson, co-chairman of
Officer Contacts
CHICAGO / NEW YORK
Lincoln International. “Today, businesses
and transactions in the mid-market are
competing and being marketed globally.
These businesses need a firm like
Lincoln International that not only
understands the global market, but has the
broad industry knowledge, resources and
contacts to consistently produce
outstanding results in mid-market
transactions.”
Chrstopher D. Cerimele
Senior Vice President
ccerimele@lincolninternational.com
+1-312-580-1987
FRANKFURT
Christian Specht
Managing Director
c.specht@lincolninternational.de
+49-69-97-10-54-62
PARIS
Jean-René Hartpence
Managing Director
jr.hartpence@lincolninternational.fr
+33-01-53-53-18-21
Edward A. Hanlon
Managing Director
ehanlon@lincolninternational.com
+1-312-580-8324
Daniel Schenk
Senior Vice President
dschenk@lincolninternational.de
+49-69-97-10-54-35
Ludovic Rodié
Managing Director
l.rodie@lincolninternational.fr
+33-01-53-53-18-23
Contributors
Fabian Kropp, Associate, fkropp@lincolninternational.com
Chad Lewis, Analyst, clewis@lincolninternational.com
6 Lincoln International DEALREADER Chemicals Q2 2006