FocusFinancial sources doubt BASF Albemarle bid

13 February 2008 21:18  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--A bid from German chemical giant BASF for US-based specialty chemical producer Albemarle is “unlikely,” said sources in the financial community on Wednesday.

Germany-based business magazine Capital, citing German market sources and analysts, said BASF would offer $4.9bn (€3.4bn) for Richmond, Virginia-based Albemarle.

“I think this is unlikely – sounds like just talk,” said one investment banker source. “The Gottwald family is also selling shares to Albemarle. Why would they sell now to if BASF was going to make a bid? The Gottwalds did not get to be billionaires by being out of the loop.”

The Gottwald family recently sold 4m shares of stock to Albemarle for $149m, or $37.22/share, noted Oppenheimer analyst Edward Yang.

“Similar reports have been circulated for a while,” said Jefferies & Co. analyst Laurence Alexander. “BASF already competes with Albemarle in the refinery catalyst market, so we believe an acquisition could prove fraught, and appears unlikely despite the recurring market chatter.”

Albemarle would make a better fit with a commodity company looking to diversify into specialties such as Dow Chemical, another source said.

There has been some confusion as to whether the reported $4.9bn offer included the assumption of Albemarle debt, said the source. If so, that would come to $45/share on an enterprise value basis. On just an equity basis, the bid would come to $51/share.

Shares of Albemarle rose $1.57, or 4%, to $39.74 on Tuesday, February 12 when the rumor came out. Shares were up another 9 cents to $39.83 in late afternoon trading Wednesday.

By: Joseph Chang
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