Engelhard rejects BASF offer, to explore options
Mon Jan 23, 2006 08:23 PM ET
NEW YORK/FRANKFURT, Jan 23 (Reuters) - Specialty chemicals company Engelhard Corp. on Monday rejected as financially inadequate an unsolicited offer from German chemical company BASF AG and said it would explore various options, including a possible sale of the company.
Engelhard urged its shareholders against tendering their shares under BASF's $37-per-share takeover offer. Engelhard, a maker of catalysts and pigments, said the offer "is opportunistic and undervalues" the company.
Engelhard CEO Barry Perry told Reuters the company would be willing to accept a higher offer from BASF, although he did not put a figure on that potential offer.
In a statement, Engelhard also said it has received inquiries from third parties about a possible deal. It did not provide details. Merrill Lynch is serving as its financial advisor.
"BASF is in the process of reviewing Engelhard's filings and will respond as appropriate," the company said in a statement in response to Engelhard's rejection. BASF launched its hostile, all-cash $4.9 billion bid on Jan. 3, aiming to become the world leader in materials used for pollution controls.
Engelhard shares closed up 13 cents at $39.71 on the New York Stock Exchange. The stock has closed above BASF's offer price on every trading day since the bid was first made.
Lawyers have said a rejection does not rule out further negotiations between BASF and Engelhard.
BASF has said it offered an extra $1 per share if Engelhard's board could demonstrate that the price was justified, but had been rebuffed.
BASF made its offer conditional on Engelhard's management not utilizing a "poison pill" defense of issuing extra shares in the event of a takeover threat. The offer was scheduled to end on Feb. 6.
The acquisition of Engelhard is seen as strategically important for BASF and a way to soak up its excess cash.
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