US Westlake makes $1bn bid to acquire Georgia Gulf

13 January 2012 16:05  [Source: ICIS news]

(recast with production tables)

HOUSTON (ICIS)--Westlake Chemical has made a $30/share (€23/share) bid valued at more than $1bn (€780m) to acquire all outstanding shares of Georgia Gulf, the US chemicals firm said on Friday.

Westlake said it first approached Georgia Gulf on 20 September with its proposal.

However, Georgia Gulf has been “unwilling to provide us with information that would allow us to explore these opportunities or to enter into substantive discussions,” Westlake added.

Georgia Gulf did not immediately return a call seeking comment.

Georgia Gulf had nearly 34m outstanding shares, according to a regulatory filing made in March, 2011.

Westlake said its bid reflects a 51% premium to Georgia Gulf’s 30-day volume-weighted average share price of $19.82, and a 66% premium to Georgia Gulf’s volume-weighted average closing share price of $18.02 since the initial offer from 20 September.

Georgia Gulf's shares were up $8.81 to $33.29/share at 09:49 hours New York time (14:49 hours GMT).

Westlake, which already holds 4.8% of Georgia Gulf’s shares, said its all-cash proposal is not subject to financing conditions.

Westlake added that it sent on Friday a letter to Georgia Gulf’s board, urging the board “to act in the best interests of its shareholders by meeting with us to seriously discuss our compelling proposal".

“We believe that our proposal represents a unique opportunity to deliver significant and immediate value to Georgia Gulf stockholders,” said Westlake CEO Albert Chao.

“As such, we are surprised and disappointed that Georgia Gulf’s management has been unwilling to engage in substantive discussions with us,” Chao added.

“Acquiring Georgia Gulf would enable Westlake to become a leading polyvinyl chloride (PVC)  resins producer and vinyl-based building products supplier, and would provide Westlake with opportunities to expand its global product offerings,” the company said.

In its letter, Westlake said it would prefer a negotiated transaction with Georgia Gulf, but stated that making the offer public to Georgia Gulf's shareholders “was now necessary”.

“We have decided to make the terms of our all-cash proposal public. Given the significant premium and near term liquidity, we are confident that Georgia Gulf's stockholders will enthusiastically embrace it,” Westlake said in its letter.

Westlake said it retained Deutsche Bank Securities and Morgan Stanley as its financial advisors.

 

Georgia Gulf and Westlake plant production capacities according to ICIS plants and projects, in tonnes per year.

Georgia Gulf products			Westlake products
Product	Combined Capacity		Product	Combined Capacity
Polyvinyl chloride	1.02m		Polyethylene linear low density	430,000
Ethylene dichloride	1.9m		Polyethylene low density	700,000
Cumene	680,000		Caustic soda	205,000
methyl styrene	15,000		Chlorine	185,000
Acetone	140,000		Ethylene	1.3m
Caustic soda	410,000		Ethylene dichloride	885,000
Chlorine	365,000		Propylene	160,000
Phenol	227,000		Vinyl chloride	590,000
Vinyl chloride	725,000		Polyvinyl chloride	365,000
			Ethylbenzene	205,000
			Styrene	259,000

 

 ($1 = €0.78)

By: Stefan Baumgarten
+1 713 525 2653

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