Ashland Chemical, the largest U.S. chemical distributor, acquired chemical manufacturer Hercules Inc. for $3.3 billion in 2008.

Question:

Ashland Chemical, the largest U.S. chemical distributor, acquired chemical manufacturer Hercules Inc. for $3.3 billion in 2008. This move followed Dow Chemical Company’s purchase of Rohm & Haas. The justification for both acquisitions was to diversify earnings and offset higher oil costs. How will this business combination offset escalating oil costs?