MOSCOW (MRC) -- A. Schulman Inc. (SHLM) has made public its offer to buy Ferro Corp. for about USD563 million in cash and stock as the specialty chemicals company continues to pursue a deal with its smaller peer, which has rejected the deal, according to The Wall Street Journal.
Schulman is offering Ferro's shareholders a per-share price of USD6.50, which is a 25% premium over Ferro's Friday closing price. The per-share price includes an immediate cash payment of USD3.25 for each Ferro share outstanding and USD3.25 worth of A. Schulman common stock.
Shares of Ferro rose 28% to USD6.65 in recent premarket trading. Through Friday's close, the stock has risen 24% so far this year.
Including debt, the deal is valued at about USD855 million.
In a letter to Ferro on Feb. 13, Schulman expressed its "strong intent" in buying the company. However Ferro's board rejected its offer and expressed its belief that the company should remain independent. Schulman said it first contacted Ferro in November of last year.
"A. Schulman and Ferro are both recognized leaders in specialty chemicals with value-added product lines, similar business models, complementary competencies, markets and applications," A. Schulman Chief Executive Joseph M. Gingo said. "We believe our combination will deliver superior value to our respective shareholders and offer better value to customers, and we would welcome the opportunity to engage in a mutually beneficial dialogue with Ferro's board and management."
A representative of Ferro didn't immediately respond to a request for comment.
Schulman highlighted its free cash flow generation over the past five years, noting this has been USD400 million as compared with Ferro's USD60 million. Schulman added that were it able to perform due diligence on Ferro, it could adjust its offer, which is currently based on public information.
We remind that, as MRC wrote previously, in mid-2012 A. Schulman Inc. inked a definitive agreement to acquire ECM Plastics, a privately owned plastics compounder located in Worcester, Mass., for USD36.5 million. Besides, Jeddah-based National Petrochemical Industrial Company (Natpet), a subsidiary of Alujain Corporation, entered into a joint venture agreement with A. Schulman to produce polypropylene compounds.
A. Schulman is a global plastics supplier, headquartered in Akron, Ohio, and a leading international supplier of high-performance plastic compounds and resins, which are used as raw materials in a variety of markets. A. Schulman has 33 manufacturing facilities globally. It reported net sales of USD2.2 billion for the fiscal year ended August 31, 2011.
MRC