Westlake Chemical Corp. (WLK) said Friday that it has withdrawn its unsolicited proposal to acquire Georgia Gulf Corp. (GGC) following talks with the smaller rival's management.
Westlake also said it now plans to sell its stake in Georgia Gulf stock as "market conditions permit". Westlake holds about 4.8 percent of Georgia Gulf's outstanding shares.
Albert Chao, chief executive officer of Westlake, said, "We are disappointed in this result but we continue to work on our previously announced important strategic initiatives as well as to look for other opportunities to grow our business."
Following the news, shares of Georgia Gulf plunged over 11 percent, while Westlake shares rose over five percent in extended hours.
The latest development follows Georgia Gulf's rejection of a sweetened $35 a share offer from Westlake in February.
On February 1, Westlake lifted its offer to acquire all the shares of Georgia Gulf to $35 a share. It was $5 more than the initial bid of $30 offered by the Houston, Texas-based Westlake on January 13. The sweetened offer represented a 43 percent premium to Georgia Gulf's closing stock price of $24.48 on January 12.
Westlake had first made the offer on September 30, but publicly disclosed it only on January 13 because of continued rejection of the offer and unwillingness to engage in substantive discussions by Georgia Gulf.
Georgia Gulf's board rejected both the initial and sweetened offer saying that it 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 initial offer, Georgia Gulf board also adopted a poison pill in the form of a shareholder rights plan.
Westlake's products includes ethylene, polyethylene, styrene, propylene, caustic and PVC resin. By acquiring Georgia Gulf, Westlake expected to become a leading PVC resins producer and vinyl-based building products supplier.
GGC closed Friday's trading on the NYSE at $34.26, down $1.05 or 2.97%, on a volume of 0.7 million shares. The stock further lost $3.31 or 9.66% in after hours trade.
WLK closed Friday's trading on the NYSE at $56.70, down $2.99 or 5.01%, on a volume of 0.9 million shares. However, the stock gained $3.09 or 5.45% in after-hours trade.
For comments and feedback: editorial@rttnews.com