USX Corp. Plans to Sell Troubled Chemicals Unit

PITTSBURGH — USX Corp. announced plans Wednesday to spin off its chemicals business to current managers in a deal expected to bring the beleaguered oil and steelmaking giant up to $600 million.

The stock-for-assets swap with the newly formed Aristech Chemical Corp. does not include USX’s TENN-USS venture in Pasadena, Tex., which has been losing money. USX’s money-losing Agrichemicals unit was sold earlier this year.

At least one Wall Street analyst said the deal probably will do nothing to discourage a possible takeover by corporate raider Carl C. Icahn, who has offered to buy the Pittsburgh-based company for $31 a share, or nearly $8 billion.

“This is actually harmful if you are trying to fend off a takeover, because you have more cash on hand. It tends to make the company more attractive,” said Charles Bradford of Merrill Lynch.

Opportunity to Sell

USX probably saw an opportunity to sell a troubled business for which it once had high hopes, said Bradford, who valued the company’s chemicals businesses at $500 million.

The chemicals division, USS Chemicals, “was going to be the key area of spending and diversification of U.S. Steel” under Chairman David M. Roderick, Bradford said.

Roderick “talked about chemicals at great length . . . a $2-billion chemical giant. This was going to be his baby, but it failed,” he said. Rising feedstock prices, less efficient facilities and intense competition in chemicals may have contributed to USX’s recent losses in chemicals, Bradford said.

“If you can get $500 million for a company that’s losing money, take it and run,” he said.

Shift of Assets

Roderick said USX plans to create Aristech Chemical Corp. and give it virtually all the assets of USS Chemicals in exchange for Aristech common stock. Pending government approval, USX will offer 22.5 million shares to the public at a price projected at $17 to $20 per share, or $382 million to $450 million.

Aristech will buy $150 million of the stock, thereby providing USX a total of up to $600 million.

Thomas Marshall, president of the USX division now operating USS Chemicals, will become chairman and chief executive of Aristech Chemical, taking USS Chemicals President Craig R. Andersson as his new president and chief operating officer.

Anthony F. Mastro, a vice president for accounting and finance at USX, will be the executive vice president for administration and chief financial officer at Aristech.

The new company will be headquartered in Pittsburgh and will employ about 1,700 people in the manufacture and sale of chemicals for industrial and consumer products.