US analysts split on bidding war for Hercules

14 July 2008 16:22  [Source: ICIS news]

HOUSTON (ICIS news)--Analysts issued on Monday clashing opinions as to whether a third company would offer a higher bid for Hercules.

US water chemicals producer Ashland has proposed buying Hercules for $3.3bn (€2.1bn) or $23.01/share. The deal could close by the end of 2008.

Ashland's offer undervalues Hercules, said Dmitry Silverstey, an analyst with Longbow Research.

Hercules has opened new cellulose plants in China, and its Aqualon product continues to grow and improve pricing, he said. Moreover, the company has done much to clean up its balance sheet.

As such, either Ashland or a third company could offer a higher bid, Silverstey said.

David Beglieter, an analyst with Deutsche Bank, doubts that a higher bid would emerge.

Hercules has an asbestos liability of at least $230m and an underfunded pension plan of $160m, he said. Beglieter also mentioned cross-currency swaps.

($1 = €0.63)

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By: Al Greenwood
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