28 August 2012 23:02 [Source: ICIS news]
HOUSTON (ICIS)--A shareholder group on Tuesday blasted TPC Group’s plan to go private through a leveraged buyout as greatly undervaluing the company.
The CEO of Sandell Asset Management said the butadiene (BD) producer’s plans for a buyout by two investment firms was an attempt “to steal the company at a grossly suboptimal price in a sweetheart LBO [leveraged buyout] with a favoured buyer in an impaired sale process at the bottom of the cycle”.
Sandell Asset Management holds about 6% of the outstanding shares in TPC.
Shareholder group CEO Thomas Sandell published a letter to the TPC board of directors to “express our outrage” with the plan.
Wall Street analyst Edward Yang with global investment bank Oppenheimer predicted on Monday that TPC shareholders might view the $40/share buyout offer as inadequate.
The share consideration includes a 20% premium to the closing stock price on 24 July, which was the last unaffected trading day prior to the media reports of a possible acquisition of TPC Group.
As announced on Monday, the offer by First Reserve and SK Capital was valued at about $850m (€680m).
Sandell said in his letter to the TPC board that the producer's profits stand to rise substantially in the next 12 months as its earnings cycle improves and that the buyout offer should reflect that.
“We believe that, on an on-going stand-alone basis, the next twelve month value for [TPC] is closer to $55-$57/share…,” Sandell said.
TPC’s “balance sheet is in great shape”, Sandell said, “and the overall market is clearly turning around”.
Sandell said he told TPC CEO Michael McDonnell on 15 August that if the company were exploring a sale, it should instead “pursue a formal auction sale process and solicit interest from what we believe to be multiple potential acquirers” in order to maximise its value.
TPC did not return queries made by ICIS.
($1 = €0.80)
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