Occidental Petroleum Corp. has agreed to acquire the plastics manufacturer Cain Chemical Inc. in a transaction valued at $2.2 billion, the companies said. Under terms of a definitive merger agreement, Occidental will pay $1.25 billion cash and will assume about $830 million in debt. Including Cain preferred stock, the deal has an indicated value of about $2.2 billion. Houston-based Cain will continue to operate with its present employees as a separate, wholly owned subsidiary of Occidental, according to the agreement, which has been approved by a majority of Cain shareholders. The transaction will result in a pretax gain of $120 million for Chase Manhattan Corp., which has had a stake in Cain since its formation. In addition, about 43 percent of the proceeds of the sale will be distributed to Cain employees, the company said in a statement. Cain, a closely held concern, was formed in March 1987 by a group headed by Gordon Cain. The group purchased and integrated chemical operations from several major chemical companies including PPG Industries Inc., E.I. Du Pont de Nemours & Co., and ICI Americas Inc. Cain now has seven plants on the Gulf Coast of Texas and is the nation's fifth-largest maker of ethylene, a component of PVC plastic. The merger will make Occidental the country's third-largest ethylene producer. Occidental Chairman and Chief Executive Officer Armand Hammer credited Cain with having built ``a strong position in petrochemicals with its large, cost efficient ethylene plants and its top quality high density polyethlyene facilities and products.'' He said he expects the acquisition to ``significantly improve Occidental's net income and cash flow'' in the long term. The acquisition, which is expected to be completed in early May, will bring Occidental's long-term debt to $6.34 billion, a spokesman said. Occidental is involved in businesses including oil, gas, chemicals, fertilizers, coal and meat products.
