BASF nominates two directors for Engelhard board
Fri Jan 27, 2006 12:11 PM ET
PHILADELPHIA/FRANKFURT, Jan 27 (Reuters) - German chemical company BASF said on Friday it nominated two directors for the board of Engelhard Corp., the target of its $4.9 billion hostile takeover bid.
Engelhard, which makes pigments and chemicals used in plastics, has rejected BASF's $37 a share offer as inadequate and urged shareholders to support its efforts to explore a potential sale or other strategic options.
Engelhard said its alternatives could produce better value for shareholders than the BASF offer.
Despite the snub from Engelhard, BASF said it nominated Julian Brodsky and John Linehan for election to the board of Engelhard at an annual shareholders' meeting on May 4. It reaffirmed that it felt its all-cash offer, due to expire on Feb. 6, was appropriate.
BASF's offer for Engelhard is conditional on the U.S. firm not invoking a takeover defense known as a "poison pill" that would make it more costly for an unwanted suitor to proceed with a takeover.
One way of disabling the poison pill is to get a majority on the board. BASF can do this by nominating directors to the current board, then starting a canvassing process with shareholders called consent solicitation that would enable it to get the by-laws changed and increase the size of the board.
It could then try to get more nominees elected and use its majority to get rid of the poison pill, lawyers say.
BASF has bid for Engelhard, which also makes emission-control systems for trucks, because it wants to reduce the cyclical nature of its product portfolio. Winning Engelhard would give it a leading position in pollution control and would also help soak up excess cash generated by its highly integrated manufacturing operations.
In Frankfurt, BASF shares were up 2 percent at 63.98 euros at 1436, while Engelhard shares were down 0.7 percent in New York at $40.50.
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