In addition, the two companies agreed to a long-term deal that calls for Honeywell to supply Shaw with raw materials. Shaw will also acquire Honeywell's 50 percent stake in a recycling plant in Augusta, Ga., that was closed two years ago but is expected to reopen. Terms of the deal, which is expected to be finalized before the end of the year, were not disclosed.
The acquisition is expected to give Shaw a steady pipeline of raw material needed to make nylon carpet. Aside from acquiring Honeywell's nylon fiber manufacturing operations in Anderson, Clemson and Columbia, S.C., the multi-faceted transaction calls for Honeywell to supply Shaw with caprolactam and nylon resin, two intermediate chemicals used to make nylon fibers.
Shaw executive vice president Julius Shaw told NFT that the decision to buy assets related to the production of nylon carpet was designed to make the company's manufacturing process less dependent on outside suppliers. "This is another step in the vertical integration that is positioning the company as a cost efficient manufacturer," he said.
According to Honeywell, the assets included represent most but not all of Honeywell's $1.2 billion nylon business. The company will retain its operations in Shanghai, China, and Arnprior, Canada, and its textile operations in Anderson, S.C., are not part of the transaction. After the divestiture and with the supply agreement, the remaining business is expected to post annual revenues of approximately $900 million.