MOSCOW (MRC) -- W.R. Grace says it will review a newly-received USD65/share bid to acquire all outstanding shares in the company from private investment fund 40 North Management (New York, New York), reported Chemweek.
The offer values the company at about USD4.3 billion. It comes two months after Grace rejected a USD60/share, USD4-billion acquisition offer from 40 North in November.
Grace will consider strategic alternatives as part of its review of the latest bid from 40 North. The company’s board will “carefully review and evaluate the proposal,” Grace say. “As part of this review, the board will consider the proposal in the context of the company’s ongoing review of potential strategic alternatives to maximize shareholder value.”
40 North owns a 14.9% stake in Grace and has two seats on the board following an agreement reached in 2019.
40 North released a letter criticizing Grace’s rejection of its earlier offer, which the fund says was “summarily dismissed.” The letter adds that “since that time, (Grace has) neither engaged with us, nor made any public statement about opportunities Grace is pursuing to maximize value.”
The offer represents a 16% premium on Grace’s 11 January closing price, and a 48% premium on Grace’s 6 November closing price, prior to when 40 North’s initial offer was announced.
40 North reiterated its criticisms of Grace, saying that the company’s stock has under-performed since the spin-off of Grace Construction Products (GCP) in 2016, due largely to environmental declines and environmental liabilities. “Grace offers a strong and unique - but unrealized - value proposition that can make it a standout player in the world of specialty chemicals,” 40 North says. “Allowing the Company to continue along its current path, however, guarantees only that the value destruction at Grace will continue and worsen, consistent with its track record since the spin-off of GCP in 2016.”
Going private can enable Grace “to quickly and decisively undertake critical actions to arrest its steady decline and turn the tide towards enhanced profitability and growth,” the fund’s letter adds.
Goldman Sachs and Moelis & Company are acting as Grace’s financial advisors in reviewing the proposal, while Wachtell, Lipton, Rosen & Katz is its legal advisor. Citi and J.P. Morgan are acting as financial advisors to 40 North.
As MRC wrote before, in October 2020, W. R. Grace & Co. licensed UNIPOL PP process technology to Dongguan Grand Resource for two additional lines. This is part of the continued investment in UNIPOL PP Process Technology lines by DGR. The first license was signed in 2016. Building additional capacity at the same site will help DGR further optimize costs, shorten construction time, and broaden their product portfolio.
We also remind that in April 2018, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation.
According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 1,990,280 tonnes in the first eleven months of 2020, up by 1% year on year. Only high density polyethylene (HDPE) shipments increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 090,900 tonnes in the first eleven months of 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.
A leader in polyolefin catalysts and licensing, W.R. Grace has the world’s broadest portfolio of polypropylene and polyethylene catalyst technologies used to produce thermoplastic resins for a variety of applications. A leading innovator and strategic partner to its customers, Grace supplies catalyst solutions for all polyolefin processes, as well as polypropylene process technology and process controls. Grace employs approximately 3,700 people in over 30 countries.