Document gDeaKmga9nvRLwyK5E97Q3aQL

%mr- [Gentleme . m 'r '; * V*ff- v : '};i?;>.:.' <: This Is in reply to the letter of November 10, t 1966 addressed by Mr. William J. Boyd, Chief, Division of Mergers of the Federal Trade Commission to Mr. J. Peter Grace, President, W. R. Grace & Co. The following responses are numbered to corre spond with the item numbers in the letter of November 10, 1966 and the names "W. R. Grace & Co." and "Grace" are used herein in the manner indicated in the third paragraph px' that letter. Item 1. The following is a list by their Seven Digit Census Product Codes of vermiculite and perlite products produced by Grace. Seven Digit Code Product 14993 05 Vermiculite Ore 32950 11 Expanded Perlite 32950 13 Exfoliated Vermiculite - LightWeight Aggregate 32950 15 Exfoliated Vermiculite - Other (such as loose fill insulation, acoustical, etc.) 10027131 jfehip:e^^dlng3plants/dealers/ distributors "and ? ^ct&tocaei^s for exfoliation. The re is some ore used in the "unexfdliated state but the greatest use is for exfoliated products. 32950 11 ~ Expanded Perlite Perlite is a volcanic porous rock which, when sub jected to high temperatures expands to several tines its original size. Expanded perlite is .a light-weight, snowwhite, bead-size material. Expanded perlite is used as a light-weight additive for building plaster and as an aggregate for roof deck concrete. It is also used as a granular insulating material for low temperature storage, in cryogenic insula tion, and horticulturally for seed bed material. 32950 13 ~ Exfoliated Vermiculite - Light-Weight Aggregate Exfoliated vermiculite is used as an aggregate with gypsum in light-v/eight, fireproofing plaster and with Portland cement in light-weight, fireproof concrete for floor, roof and roof deck insulation. 32950 15 ~ Exfoliated Vermiculite - Other Exfoliated vermiculite for uses other than as a light-weight aggregate include: (a) Attic Insulation and Insulating Fill - Loose fill products used principally for insulating ceilings and sometimes walls in new and existing buildings. 10027132 'if ' aiialys'iMfarr $rpj${k ^pe^tici'des^ 2rbfe;L&ej|^ firebase for .^charcoal In out&bbi^rillsJJsoil conditioner; mulch;-seed starterjrpiant'prdpagator. (e) Industrial Uses - Include Insulating of coke ovens, slow cooling of fo>*gings, grease absorbent ingredient., packaging and shipping. Vermiculite and perlite compete in their different end-uses in varying degrees. Generally, the physical characteristics determine which has the greater acceptance for a given application and in most cases price is not an important factor. However, in all cases both perlite and vermiculite compete with a wide variety of other materials. Discussions of vermiculite versus perlite and their major end-uses folio Plaster Aggregate Perlite finds its greatest use as a light-weight aggregate for plaster where veraiculite finds very limited use. Most plasterers prefer perlite plaster mixes over vermiculite because perlite has the abrasive characteristics of sand (sand Is widely used in plaster) and because of its white color. Vemicullte does find some use as a plaster aggregate primarily where greater acoustical properties and/ or an Improved textured finish is desired. 10027J33 J ?rK?p&Y 1 * *4 tf*Vfr 11 ^v ^V*T*5* ^vti\u t ^rit^rxtrffe SS'S- ? Perlite also iinds wide usage in cryogenic l [ insulation where it provides a higher insulating value than '* '1 vermiculite and at a lower cost. -f? Concrete Aggregate The major area of competition between vermiculite and perlite is as a light-weight aggregate in concrete mixes. Here vermiculite and perlite compete with a number of other aggregates including expanded shale and cellular or foamed concrete. Vermiculite and perlite have quite different features as a concrete aggregate. Perlite concrete has a higher insulating value than vermiculite concrete, it is stronger, uses less water in the mix and dries faster, and has a somewhat lower cost. Vermiculite concrete is much easier to pump than perlite concrete which, because it is very abrasive, does not lend itself to pumping well and vermiculite concrete is more stable than perlite concrete which has unpredictable growth characteristics. Agricultural/Horticultural In the agricultural/horticultural field, the physical characteristics again play the leading role in determining preference between vermiculite and perlite. 10027134 expanding ^facilities'.^ - . .. y-/)- Home Insulation Lty' to mining ;,ahd f' JV* m Vermiculite and perlite compete with a great many products In the insulation field. As to vermiculite versus perlite, vermiculite has certain characteristics that make it preferable over perlite in the "loose fill" type of insulation. First it is relatively dust-proof as compared to perlite which is quite dusty. Secondly, it flows better than perlite. These factors are major plusses for the home insulation market which is predominately "do it yourself". Perlite, on the other hand, has a higher insulation value, a somewhat lower cost and is universally available. The latter advantage is partially offset by a lack of uniformity in the product. Copies of the following brochures, specification sheets, catalogues and other similar materials which describe vermiculite and perlite products are enclosed herewith in the folder marked "Exhibit l-l". Vermiculite-General G-231 Properties and Uses (of Vermiculite) iAStftJ HI-119 Zonolite Insulating Fill KF-S3 Masonry Fill Insulation MF-125 Guide Specifications for Masonry Fill PA-87 Fire Protection and Sound Absorption G-272 Verxite Granules TL-I38A Terra-Lite G-I87 3ar-B-Sorb Additional literature of this type `.-.'as submitted as Exhibit o to Grace's letter of April 19o3 in resoonse to the Conmissjon's inquiry of March 18, If53 relating to the acquisition by Grace of The Zonolite Company. Item 2(a). The products listed in response to Item 1 are mined, manufactured, processed and/or sold by the Zonolite division, Texas Vermiculite Company, a 7ojj- owned subsidiary, Cuaailiiifuorrinuia Zonolite uCuommppeany^ a 1iu0u0jj?-- owned subsidiaryr 9&t AriirrZZoonnoolJli.ttee Company, a o7T/jS-o:vmmee.d subsidiary*? ' ^ ^ lfJ:r.; ,'yv " i Item 2(b). Exhibit 2(b)-1 submitted herewith shows the location of all mining, manufacturing, processing and principal distribution facilities for those products listed in Item 1 that were owned and/or operated by Grace during 1963, 196b and 1965 and the principal product or products mined or manufactured therein. The normal selling areas for each facility, except the mines, is ? radius of 150 miles from the plant. The Enoree, South Carolina mine serves the Eastern section of BSjhjaftSft___ ... owing{describes the ^competition listed in Item'i.l;itj<b9^^ by Gra;.e^ Grace has no mean''"''>ihfi^^5inforinatibn by .individual selling areas. ' ; ' > 14993 05 - Vermiculite Ore 'iV Vermiculite ore production in the United States in 1964 according to the ''Bureau of Mines 2-iineral Yearbook 1964' was 226,300 tons. In addition, lo,40Q tons were imported from South Africa. Grace's production of vermiculite ore in 1964 was 221,000 tons (approximately 90^ of the total U. S. production and imports for the year). Other U. 3. producers of vermiculite according to the Minerals Yearbook are: Patterson Vermiculite Co., South Carolina American Vermiculite Co., South Carolina RImledge Uranium and Mining, Colorado There Is a great deal of vermiculite ore located all over North America. However, the only known iarge deposits with high concentration are owned by Grace and the companies referred to above. Grace's large share of the U. S. vermiculite production arises out of the natural phenomenon that the largest known vermiculite deposit in the Western Hemisphere is in a knoll in northwestern Montana that is owned by Grace. It is estimated that this single deposit, which is located on one knoll in Montana, represents more than 9C# of the total developed vermiculite reserves in the United States. 10027137 tL96total U^ S. sales. ' "f -v ' Names and addresses of perlite expanders are'.-. given In the Pit and Quarry Map furnished as Exhibit 2(d)-1. 32950 13 - Exfoliated Vermiculite Aggregate The Department of Commerce Census of Manufacturers provides "7 digit" product information every five years. The most recent "j digit" information Is for the calendar year 19&3- The 19^3 Census provided two classifications for light-weight aggregate as follows: 1) 32950 11 - Light-VJsight Aggregate (such as diatomaceous earth, expanded clay, expanded slag, perlite, cinders, haydite, pumice,but excluding vernicuiite) and 2) 32950 13 - Exfoliated Vermiculite - Aggregate The reportable quantities published by the Depart ment of Commerce for these classifications and Grace's i sales of each are as follows: Light-Weight Aggregate 10027138 1963 Census 32950 11 Lignt-weignt aggregate, ex vermiculite 32950 13 Light-weight aggregate, vermiculioe Total U.S. Production (tons) 5j75-,9I3 72,469 5,031.302 Sold by $ of Grace Total (tons) 4,'430 0.1# 32,640 45.0# 37,070 0.6# ;'ftftehaines*'an<i'^Lcldresses'~'of .most- of U.' S. producersioff'|+thVse*v /fto-l1!lon wing - aggregates^_______.____-V.. i |Ciridersi .atomite^ Expanded Clay,*Expanded"Perlite, Expanded Shale, E r .\nded Slag7':Expanded Slate,:. Expanded Vermiculite, Ply Ash, Pumice, Toff, Volcanic Ash," Volcanic Cinders, Volcanic Scoria. It Is believed that thLs map, although not all inclusive, lists the majority of the light-weight aggregate producers. However, as noted on the map, "Plants manufacturing light-weight aggregate solely for their own use are not listed on the map. Also omitted from this map are plants that failed to provide information regarding their product, location and brand name." The sales of light-weight aggregate of these producers (excluding Grace and its distributors) is not known to Grace. 32950 15 - Exfoliated Vermiculite - Other Grace sold 51,3^5 tons (52#) of the total tonnage (9S951 tons) of Exfoliated Vermiculite - Other (Code 32950 15) reported in the 1963 Census of Manufacturers (the most recent 7 digit census). f Grace sales reported under Exfoliated Vermiculite Other (Code 32950 15) in the 1963 Census of Manufacturers had end-uses as follows: 10027139 J I F ;as;; loose-fti2|Si ^ahd existing buildings.'' This is known^l^^ ;ior? where it is used principally to insulate < (atticsfahd sonry fill insulationin concrete block * ?and cavity* tlScoristruction where it is poured in the ? core of the block or in the void between two masonry v surfaces. The total building insulation market was estimated by Grace management to have been well in excess 50,000,000 in 1963 with Grace's estimated vermiculite to the market of $2,000,000 representing 1.3# oxtne total. Mineral wool insulation is the biggest factor^rn this market as indicated by the 15^3 Census of Manufacturers which reported under Code 329ol - ''Mineral Wool Structural Insulation" - total shipments of $107,670,000.djVwhioh $-r9y06l ,000 was~rFT "Loeao-Weal- and"Granulated W770l-11-ami $01-t333,0C3~iTt--:-'-Builds W-ng Ro-'-f J R1wwlfr.fr ind T? -vl ~i m Zonolite's prinicpal competition in the building insulation market are: Armstrong Cork Co. Allied Chemical Baldwin-Ehret-Hill, Inc. Celotex Corp. Dow Chemical Co. Eagle Picher Co. Gustin-Bacon Mfg. Co. Johns-Manvilie Libby-Owens-Ford Glass Co. National Gypsum Co. Owens-Corning Fiber,gias Corp. Pittsburg Plate Glass Co. Reynolds Metals Co. U. S. Gypsum 10027140 m '^v '` ' v f'.Pc;v t; -v Tohns-ManvllleW^q..;,, h^-?-";. ''' United -PerlltelC6rp^w'' Oneida PerlitefCorp. Minerals & Chemicals Georgia KayIon Co. International Minerals % ' ~: In addition to the above, materials used as carriers for agricultural chemicals are readily available throughout the country from many local suppliers. The size of the market for carriers of non-farm agricultural chemicals is not available. Accordingly, Grace's percentage of this total market is not known. The total market for non-farm agricultural chemicals was estimated to be $250,000,000 annually in an article in "Chemical Week" magazine (February 23, 1963* page 121). It is therefore a reasonable inference that the percentage of the total market in carriers for non-farm agricultural chemicals represented by Grace's sales in this market is very small. J Mixed Products - Fireproofing and Acoustical ii Grace's mill mixed plasters for fireproofing and acoustical insulation compete with perlite plasters, acoustical tile, cement encasement, lath and plaster, and sprayed-on asbestos sold by the following companies which are Grace's major competitors in this field: i 10027141 ,,.. trT*~**?r,----5?---^--, - -onal3Acoustical; Contractors 'Association) "sure $120 -000,000ii It iis further, estimated:by this publication'that acoustical' tile sales account for S8# of the annual U. 3. acoustical insulation arket. Based on these figures, Grace's sales in the building, fireproofing and acoustical insulation market represent less than 1S& of the market. Soil Conditioner (Terralite) Grace's Terralite competes with peat moss in the market for soil conditioners. Grace does not know of any single large producer of peat moss. The "Minerals Yearbook, 196l" (Volume II) states that they surveyed 123 producers in 22 states to obtain production statistics. This publication shows that the total peat moss consumed in the U. S. in 1961 amounted to $15,200,000. 94# of the peat moss consumed in the U. S. in 1961 was used for soil conditioning. Grace's estimated sales of Terralite for the fiscal year ending March 31j 1962 amounted to $320,000 or approximately 1.3# of the total soil conditioner market. Item 3. The corporations engaged in the manufacture processing and/or sale of any of the products listed in response to Item 1 which were acquired by Grace since January 1, 1951 are the Zonolite Company and Perlite, Inc. In addition, upon the acquisition of the Zonolite Company Grace acquired among other assets of Zonolite approximately 27-5#> 46.8#, 33-3# and 32.9^ of the capital stock of Vermiculite Northwest, Inc., California Zonolite Company, Ari-Zonoiite Company and Western Mineral Products Company, respectively. The Zonolite Company participated J00271 42 effected in each;case in crder to pernitlthe stockholders * i fthese companiesJto?obtain a readily marketable security present their .investment and to afford 'to them a participation in Grace's other activities. -.TV-"' ~ Detailed information regarding The Zonollte Company was furnished to the Federal Trade Commission by Grace in response to the Commission's inquiries of March 18 and June 2U, 19&3- The information so furnished is incor porated herein by reference. The following information is submitted in respect of Perlite, Incorporated, Vermiculite Northwest, California Zonolite. Ari-Zonolite and Western Mineral Products. [ Perlite, Incorporated Sy Perlite, Incorporated, 1050 S. E. 5th Street, Hialeah, Florida, was acquired by Grace on October 18, 1965. Grace purchased for $175,000 cash the land, building, pro duction equipment and the trade name "Floralite". In addition^ the inventory on hand on October 18, 1965 was purchased for $19,818. Perlite, Incorporated served the Southern Florida market with a line of construction and horticultural products. Its only manufacturing operation v/as the expansion of perlite ore and packaging of the expanded product. Its products fall Into two seven digit census product codes as follows: 32950 11 - Expanded Perlite 9999 00 - Resale Items * 0027143 . fiscal yearleii^ed October 31/1964. of $276,700, of which $152,700 was in perlite products and $124,000 in resale ""items. Its total assets on October 31, 1964 were $147,182. This was from the most recent balance sheet submitted to Grace by Perlite, Incorporated. The following is a list of the names 'and addresses of the Perlite, Incorporated executive personnel at time of acquisition by Grace: Name Position Home Address LaVerne Christooher Allen Mabel V. Grimes Bruce Noland Robert W. Allen President & Treasurer Vice President General Manager Secretary Morgantown, West Virginia Morgantown, West Virginia Miami, Florida Morgantown, West Virginia 3T Vermlcullte-Northwest, Inc. On September 15, 1966, Grace acquired 5,235 shares representing 72.5 of the outstanding shares of common stock of Verrciculite-Northwest, Inc., 2020 Airport Way South, Seattle, Washington, in exchange for 1,856 shares of Grace common stock. The purchase price was based on the December 31, 1065 book value of the 5,255 shares purchased which was $103,590. The Grace shares were calculated at the average market value for the month of December 1965 which was $54.93* The purchase of the additional 5,285 shares gave Grace full ownership of tne 10027144 I* expanding plant ;'^kr,.:in a leased facilityfat North 1313 Maple Street, Spokane, , Washington, ana an expanding plant in leased facilities at 2303 N. Harding Street, Portland, Oregon. In addition, it leased a warehouse/office building located at 2020 Airport Way South, Seattle, Washington. Its selling area covers the States of Washington, Oregon and Northern Idaho and its sales in 1965 were $673,000. It had total assets on September 30, 1966 of $193,817- The following is a list of the names and addresses of Vermiculite-Northwest's executive personnel at time of aec uis it ion: Name Pos i ti< >n Home Address W. V. Culver A. C. Tressl K. McDaniel President Vice President, Treasurer and Sales Maneger Productior iiana ;er 11012 S.E. 31st Street Bellevue, Washington East 1U219 Valley Way Spokane, Washington West 734 Knox Spokane, Washington itrfcjLencd 3'-** California Zonolite Company On September l;'r, 3 S'*:>, shares (53.2#) of the 35,58! ;v.,s capital stock of California Zcr ol Boulevard, Los Angeles, Califcrr.i race purchased 13,917 ending shares of the te Company, 75-' Colorado for 23,727 shares of A'^i&pol&t^ren&iybld^ >* ': ' > ^ California ZonolLte or erates verniculite expand ing plants located at 6851 Smith Avenue, Newark. California and at "5440 San Fernando Road Wert, Los Angeles^ California. In addition, they maintained the headquarters in a leased facility at 758 Colorado Boulevard, Los Angeles, California. Its normal selling area covers the state of California and western portions of Nevada and its net sales in 1965 were $1,887,000. Its total assets on September 30, i960 were $999,803. The following is a list of tr j names and addresses of California Zonoiice's executive perj onnel at time of acquisition: Name Position Hone Address C. H. Wendel President 432 Georgian Road Pasadena, Calif. J.A. Kelley Treasurer 2672 Orrington Avenue Evanston, Illinois A. W. Dambros Vice President, Sales 15214 Tuba Street Manager, So. California Mission Hills, Calif. T. H. Pickthall Vice President, Sales Manager, No. California 42253 Canlno Santa Barbara, Mission Highlane East, Freemont, Calif. D. F. Gillin Assistant to President 5534 Gross Canyon La Crescenta, California J. H. Huxley Production Manager 915 University Avenue Burbank, California 10027144 jg ' .^'l".'!/Ari-Zoaolite,s principal products are the exfoliated vermiculite products described ir. response to Item 1. It also sold^on a resale basis, glass fiber insulation and polystyrene molded board. Ari-Zonolite operates c-it of one plant located at 5201 Glendale Avenue, Glendale, Arizona. Its sales territory covers the state of Arl:ona and a snail portion of southern Nevada, its net sale ; for the year ended December 3^> 13-5 "2re aid its total assets on September I.966 were $2o0,h23. The foliovj inj is e. .1st cf the names and addresses of Ari-Zonolite's executive porso .r.ei at tine of acquisition: ;ane C. H. Wendel Pos it Lor. President Home Address J132 Georgian Road, F-iaculona* Gal. J. A. Kelley Treasurer 2672 Orrington Avenue, Zvanston, Illinois D. Gilchrist General Manager 3338 North 6lst Place, Scottsdale, Arizona R. Mariano Plai t Manager 2335 West Cars'.-::: Drive Phoenix, Arizona 10027147 ...... * a)f: Agreements relating to 'the purchase bffPerlitet'S Inc. assets. i;.-j. '. I?-/: - >T.-^ - i; b) Cash transaction - no documents .fixed With Securities and Exchange Commission or stock exchange. c) Copy of.the follow ng: Request for Capita Appropriation submitted to Grace Board of directors. Analyses, profitability stud es, etc. made or. this acquisition are co: tained in this document. a) Tnere were no pres: releases or written announcements to customers, suppliers, or employees prepared by Grace on the purchase of Perlite, Inc. a: sets and, to the best of our knowledge, the. ? were no such releases or announcements p: spared by Perlite, Inc-. Exhibit U-2 Grace's Actuisition of VermiculiteNorthwest, Inc,,__________ a) Agreement and Plan o; Reorganization among VI. R. Grace & Co., Vermiculite-Nortnwect, Inc. and Selling S-ockholders dated August 5> 11)66. b) Listing AppLL:at1o: to the New York Stock Exchange ('.hi; a op. ication also covered tne listing of th i stoc:C issued in the CaliforniaZonolitc acqu isi ti'. \). 10027148 releases*;orj<armouncements prepared'by i5i^eraIculite-Nori;hMest. "'7^"' Exhibit 4-3 r .ace's Acquisition of California Zonolite Cor my - a) Agreement and Plan of Reorganization among California Zonolite Company, its stockholders and W. R. Grace & Co. dated August 17, 1966. b) The Listing Application filed with the Nev York Stock Exchange, on this acquisition^iTs being submitted under Exhibit 4-3xtr)-^5overin6 Vermiculitc-Korthwest, Inc. (The application covered both acquicitions.) c) Copy o: the follow ng: Request for Capita Appropriation submitted to Grace Board of directors. Analyses, profitability stua'es, etc. char were made on this acquisition a e contained in this document. d) There were no press releases or written announcements to customers, suppliers, or employees prepared by Grace on the purchase of California Zonolite Company assets and, to the best of our knowledge, there were no such releases or announcements prepared by California Zonolite Company. ? Acquisition" of'Ari-' :of|_ - no .docximents filed, bccliange^Cpnualsslbn' ioi^fei^ 3fdr%St6ck|ExchanEci'-%:^.k.; --!. ' Ss<te35Bfe^a3!St^felWa*5> s-ni -iVl . -V** ^^ue,s^oj^Caplvta.^Appropriations. '$? Analyses ; pi;ofitabllity'|stud es, etc. that were made|t 'pctf'..tills acquisition are contained in this;*f! : document. Uihr There were - o pres- releases or written announcements to ci stomers, suppliers, or employees prepared by Grace on the purchase of Ari-Zonolite Co. assets and, to the best of our knot/ledge. There were no such releases or announcements prepared oy Ari-Zonolite Co. Item 5. The reasons fcr Grace's acquisition oi the Zonolite Company were fully stated in response to the Commission's inquiry of Marcu 1963 2-nd the information set forth in Grace's letter dates April i, 1963 addressed to the Commission is incorporated here in by refc.ence. oiiowing is the information reqi;estcd in respect of the cquisition of Perlite. Perlite, Incorporated v as ov;nea by two minor sons of Kr. H. W. Christopher, u,e latter having been hilled in the year preceding the acquisition. Control of the company v/as exercised by the mother under a voting trust established by the court. Under these circumstances the parties in interest were extremely anxious to liquidate tneir investment in Perlite. Some Zonolite divisj on customers request perlite because of its physical properties which make^niore satisfactory than vermicullte for certain end-ases. The addition of perlite manufacturing facilities In Southern Florida enables Grace to satisfy this customer demand. The Perlite, Incorporat id operation has become part of Grace's Zonolite division Florida region with the factory superintendent ard sales personnel reporting to Zonolite's Regional Florida Manas :- 10027150 10027151 l i