<BREAKFAST WITH THE FOOL>

Monday, June 28, 1999

"Man is still the most extraordinary computer of all." -- John F. Kennedy

Latest Market Numbers

French Firm to Buy Nalco

Not the sexiest story to kick off the week, Naperville, Illinois-based Nalco Chemical Co. (NYSE: NLC), the world's largest water treatment services and products company, has agreed to be acquired by France's Suez Lyonnaise des Eaux for about $4.1 billion, or $53 a share, in cash. That represents a 24.7% premium over Nalco's closing price Friday of $42 1/2. Nalco shares jumped $5 1/4, or 14%, in the last two trading days on takeover rumors. Suez Lyonnaise des Eaux is set to commence a cash tender offer within five business days.

The deal comes on the heels of Suez Lyonnaise des Eaux' June 15 announcement that it would acquire Calgon, a Pittsburgh-based water treatment company with annual revenues approaching $300 million. Nalco, which provides on-site services to more than 50,000 industrial and commercial customers in more than 120 countries, expected 1999 revenues, including affiliates, of around $1.94 billion. The Nalco acquisition will put Suez Lyonnaise des Eaux' total water-related revenues in excess of $7.4 billion. Suez Lyonnaise des Eaux' annual revenues total $32.5 billion.

Suez Lyonnaise des Eaux anticipates the deal, expected to close in the third quarter, to be immediately accretive to cash flow in the first year and to be accretive to earnings beginning in the second year. It expects to realize more than $100 million in cost savings and "to take full advantage of important cross-selling opportunities." Suez Lyonnaise des Eaux will base its worldwide water treatment operating center in Naperville, under the direction of Edward Mooney, chairman and CEO of Nalco.

News To Go

PC direct seller Dell Computer (Nasdaq: DELL) signed a three-year agreement to be the exclusive global PC supplier to long-time customer Boeing Co. (NYSE: BA). The deal ranks among Dell's biggest -- its other major corporate customers include Ford Motor Co. (NYSE: F) and Mobil Corp. (NYSE: MOB).

Milwaukee-based electric and natural-gas utility Wisconsin Energy Corp. (NYSE: WEC) announced it will acquire neighboring gas company Wicor Inc. (NYSE: WIC) for $1.275 billion, or $31.50 a share, in cash and stock, plus assumption of debt. The deal will create a major Midwestern energy player with a market capitalization of $7.3 billion and is expected to be accretive to earnings in 2001.

United Parcel Service of America has agreed to buy Miami-based privately held Challenge Air Cargo Inc. for an undisclosed sum as it continues to expand its presence in Latin America. UPS isn't a public company, though we wish it were -- see our wish list of private companies we'd love to invest in.

Paper giant Georgia-Pacific Corp. (NYSE: GP) and Chesapeake Corp. (NYSE: CSK) said they will combine their commercial tissue paper products units. Georgia-Pacific will pay Chesapeake $730 million for a 90% stake in the venture. Chesapeake plans to use the cash to buy back 4 million to 7 million shares, to pay down debt, and to make acquisitions.

Cigarette maker R.J. Reynolds Tobacco Holdings (NYSE: RJR) has launched a venture to develop new drugs that can mimic nicotine's effects on the brain, according to The Wall Street Journal. The new unit, called Targacept, is competing head-on with pharmaceutical companies to develop nicotinic compounds, which scientists believe can provide benefits such as pain relief and memory enhancement.

Money-losing theme restaurant operator Planet Hollywood International (NYSE: PHL) announced that its president and chief operating officer, William Baumhauer, has resigned to pursue other interests after just a year at the company. Check out the Fool's recent "Save the Planet" contest on how to save the withering company.

More Foolishness

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor