A day after chemical company Georgia Gulf Corp. (GGC) rejected its unsolicited acquisition offer and adopted a "poison pill", larger rival Westlake Chemical Corp. (WLK) said Tuesday that Georgia Gulf was once again standing in the way of its shareholders receiving immediate value and a substantial premium for their investment.
Westlake Chemical made a $30 per share offer on Friday to buy Georgia Gulf in a all-cash deal valued at about $1.03 billion. The offer price represented a 22.55 percent premium to Georgia Gulf's closing stock price of $24.48 on Thursday.
The Georgia Gulf board rejected the offer saying that the offer was highly opportunistic at a time when it is recovering from an unprecedented downturn in the industry and the volatile public equity market.
After rejecting the offer, Georgia Gulf board also adopted a poison pill in the form of a stockholder rights plan. The rights will become exercisable and allow holders to acquire the company's common stock at a discounted price if a person or group acquires beneficial ownership of over 10 percent of its outstanding common stock.
Westlake had revealed that it has already acquired about 4.8 percent of Georgia Gulf's outstanding shares.
"Georgia Gulf's Board is once again standing in the way of its shareholders receiving immediate value and a substantial premium. 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 Chemical said in a statement.
Westlake Chemical noted that it had no choice other than to take its compelling proposal directly to shareholders due to Georgia Gulf's boards refusal to allow it to explore opportunities through discussions and even with a sweetened offer that is justified.
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.
Westlake Chemical'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.
In Tuesday's regular trading session, GGC is currently trading at $33.18, up $0.25 or 0.76% on a volume of 0.58 million shares, and WLK is currently trading at $54.29, up $0.42 or 0.79% on a volume of 0.20 million shares.
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