A spurned would-be buyer of Columbia-based W.R. Grace & Co. boosted its offer for the specialty chemical giant on Monday to $4.3 billion as it aims to reverse what it sees as years of underperformance.
40 North Management LLC, an investment arm of New York-based building materials company Standard Industries, raised its offer to acquire all of Grace’s outstanding common stock to $65 per share in cash, a 16% premium to Friday’s closing price.
Shares of Grace jumped 6.4 percent to close at $59.52 each Monday.
Grace had rejected 40 North’s offer in November to buy the company for $60 a share in cash, saying the bid “significantly” undervalued the company.
The revised offer from 40 North, Grace’s largest shareholder, represents a 62% premium over Grace’s closing share price on Oct. 13, the day before a 40 North representative resigned from Grace’s board ahead of making the initial offer.
“Despite the compelling value, fairness and certainty of our November Proposal, the Board summarily dismissed the offer the same day it was received,” wrote Standard co-CEOs David J. Millstone and David S. Winter in a letter Monday to Grace’s board. “Grace’s failure to even engage with us demonstrates a casual willingness to deprive shareholders of their most credible opportunity to realize immediate value.”
Since turning down the offer, Grace has not talked to 40 North or announced any other strategic alternatives to boost value, Millstone and Winter said. They said Grace’s stock has languished around its closing price Nov. 10, the date of the proposal.
“It is even more difficult to reconcile ... given that Grace has nothing to show in terms of shareholder value creation, both over the last few months and in the five years since the creation of ‘New Grace,’ ” the letter said.
Grace spun off GCP Applied Technologies in February 2016, splitting into two publicly traded companies. GCP, a construction products business, is headquartered in Cambridge, Massachusetts., while Grace’s silica and catalyst businesses kept the W.R. Grace name and remained based in Columbia. Grace had emerged from a 13-year bankruptcy reorganization caused by its asbestos-related obligations in early 2014.
Grace said Monday that its board will consider the latest proposal as part of an ongoing review of potential alternatives. The board will evaluate the proposal, the company said, “to determine the course of action it believes is in the best interest of the company and its shareholders.”
In rejecting the November offer, Grace had said the fundamentals of its high-value, specialty businesses remain strong and demand is improving despite serving customers that have been hurt by the pandemic.
The company develops and makes catalysts and related products used in energy, refining and chemical manufacturing, and chemicals used in making pharmaceutical, cosmetic and dietary supplement products. It sells to customers in more than 60 countries and employs 4,000 people.
It counts a large plant in Curtis Bay among its manufacturing facilities.