Houston-based Westlake Chemical Corporation said Tuesday it will take its unsolicited bid to buy all outstanding shares in competitor Atlanta-based Georgia Gulf Corp. directly to the company's shareholders and urged them to immediately begin negotiations.
Westlake's statement came a day after Georgia Gulf's board rejected Westlake's $1.03 billion offer to acquire all of its outstanding shares for $30/share in cash, a 51% premium to the 30-day volume-weighted average share price of $19.82.
"After careful consideration, Georgia Gulf's board determined that Westlake's proposal is financially inadequate and not in the best interest of Georgia Gulf stockholders," President and CEO Paul Carrico said Monday in a letter to Westlake President and CEO Albert Chao.
According to the letter, the Georgia Gulf Board of Directors said it believes that the proposal reflected only a 23% premium to Georgia Gulf's trading price of $24.48/share on the last trading day prior to Westlake's public proposal, and was a discount of 26% to its 52-week high.
Georgia Gulf also adopted a stockholder rights plan Monday, which would allow existing stockholders to acquire additional stock at a discount if a person or group acquires more than 10 percent of the outstanding shares.
"Georgia Gulf's rejection of our proposal and their adoption of a 'poison pill' is entirely consistent with its board's entrenched approach and refusal to come to the table to negotiate in good faith," Westlake said Tuesday.
"Last night's response from Georgia Gulf demonstrates why Westlake had no choice other than to take our compelling proposal directly to Georgia Gulf's shareholders and we urge those shareholders to make it clear to Georgia Gulf's Board that they should immediately begin negotiations with us about getting a transaction done," the company statement said.
Westlake currently owns approximately 4.8% of Georgia Gulf's outstanding common shares.
A merger of both companies would create a major North American olefins, vinyls and building products producer. It would become the second-largest PVC producer in the US market, with combined production capacity of more than 4 billion lb/year (1.8 million mt/year), according to market sources.
Shintech, the largest US PVC manufacturer, produces nearly 6 billion lb/year, sources said.
This is not the first time that Georgia Gulf has been the target of an unsolicited takeover bid. In 1989, the company received an offer of $1.1 billion from NL Industries, a Houston-based chemical company. In that instance Georgia Gulf proposed the recapitalization of the company as a solution to its shareholders to avoid the unsolicited bid.
