W.R. Grace & Co. said it’s open to selling itself to 40 North as long as a transaction reflects the company’s “full value,” opening the door to a deal days after the investment firm raised its bid. The shares surged.
The chemical maker is prepared to move quickly to set up talks, Chief Executive Officer Hudson La Force said Friday in aletter to 40 North, its largest shareholder. Grace rejected an earlier bid in November from the investment firm, which is linked to Standard Industries Inc. But 40 Northraised its offer to $65 a share from $60, Grace said Jan. 11, valuing the company at $4.3 billion.
“As a next step, we would be willing to share with you, under customary and appropriate confidentiality arrangements, information that would support a full valuation of Grace,” La Force said.
Grace’s letter increases the likelihood of a deal amid a downturn in some of the company’s key markets. Prices for catalysts used in the production of fuel and other chemicals have stagnated, with some customers switching to cheaper options. Makers of catalysts, which are used to accelerate the production of petrochemicals and plastics, also face challenges as the world moves away from a reliance on fossil fuels.
The shares jumped 9.3% to $64.11 at 2:28 p.m. in New York after advancing as much as 11% for the biggest intraday gain since Nov. 9, when 40 North unveiled its earlier bid.
La Force said the Columbia, Maryland-based company has strong “opportunities for continued growth and value creation” as it emerges from the disruption of the coronavirus pandemic.
“We have experienced a rapid recovery from the pandemic and expect fourth quarter 2020 sales and gross margin to approach pre-pandemic levels, with adjusted free cash flow nearing 2019 levels as well,” La Force said in the letter.
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