Westlake Chemical Corp. (WLK) said Friday that it has made an unsolicited offer to buy rival chemical company Georgia Gulf Corp. (GGC) for $30.00 per share in cash.
Based on Georgia Gulf's 34.24 million shares outstanding as of September 30, 2011, the offer is valued at about $1.03 billion, and the offer price represents a 22.55% premium to Georgia Gulf's closing stock price of $24.48 on Thursday. On the news, Georgia Gulf shares surged 35.29% to $33.12 on Friday. The Atlanta, Georgia-based company's shares are trading in a range of $12.19 to $40.59 over the past year.
Houston, Texas-based Westlake Chemical had first made the offer in September, but made it public now because of continued rejection of the offer and unwillingness to engage in substantive discussions by Georgia Gulf.
Albert Chao, Westlake's President and Chief Executive Officer, said, "Since the initial delivery of our proposal on September 20, 2011, we have made numerous attempts to engage in meaningful dialogue with Georgia Gulf and have expressed our willingness to explore, pursuant to a customary confidentiality agreement, whether opportunities exist that would justify increasing our proposal price. However, Georgia Gulf has been unwilling to provide us with information that would allow us to explore these opportunities or to enter into substantive discussions."
Westlakel's products includes ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC resin and PVC building products including pipe, windows and fence. By acquiring Georgia Gulf, Westlake said it would become a leading PVC resins producer and vinyl-based building products supplier, and would be able to expand its global product offerings.
Westlake revealed that it has already acquired about 4.8% of Georgia Gulf's outstanding shares.
Westlake also said its offer is not subject to a financing condition. The company expects the deal to be accretive to earnings in the first fiscal year after it closes.
Westlake shares are currently trading at $51.70, up 46 cents.
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