Plastic compounds and resins supplier A. Schulman Inc. (SHLM) on Monday urged the board of directors of Ferro Corp. (FOE) to "seriously consider" its previously announced takeover offer for the specialty materials and chemicals maker. The company added that it was open to revising the terms and structure of its initial offer.
Schulman had initially contacted Ferro in November 2012, and sent out a letter on February 13 that expressed its "strong intent" in pursuing a combination of the two companies. However, Ferro's board had rejected the offer and expressed their desire to remain independent.
On March 4, Akron, Ohio-based Schulman offered to acquire Mayfield Heights, Ohio-based Ferro in cash and stock for $855 million, including debt. That deal represents a total equity value of $563 million.
Schulman's proposal was to acquire all of the outstanding shares of Ferro common stock for a consideration of $6.50 per share, representing a 25 percent premium over Ferro's closing stock price on the previous trading day.
Schulman had said it will willing to adjust its initial offer as warranted by a customary due diligence process. However, the company noted that Ferro's board of directors had flatly rejected the offer without further discussions or the opportunity for the company to conduct due diligence.
Joseph Gingo, Chairman, President and Chief Executive Officer of Schulman said, "Contrary to what the Ferro Board of Directors stated in a letter to Ferro shareholders dated April 18, 2013, our proposal is not a 'low-ball' offer, and we have publicly stated that we are open to revising the terms and structure of our initial offer, provided we are given an opportunity to conduct customary due diligence and engage in a meaningful dialogue with Ferro."
Gingo also said that Schulman was disappointed by the Ferro Board's refusal to talk, noting that the refusal was evidently driven by Ferro's desire to stay independent. He added that Schulman would be able to significantly increase the cash component of its proposal, if desired by the Ferro board.
Schulman said it publicly disclosed its offer in March so that it would allow Ferro shareholders to understand and weigh in on a business combination that Schulman believes would create substantial value for shareholders of both companies.
Schulman noted that a large majority of Ferro shareholders have indicated that the Ferro board should have engaged in talks with the company instead of summarily rejecting its offer. Further, Schulman said that its own shareholders have indicated overwhelming support for the company's efforts to acquire Ferro.
In Monday's regular session, SHLM is trading at $24.84, down $0.77 or 3.01 percent on a volume of 27,458 shares. FOE is trading at $6.58, down $0.25 or 3.52 percent on a volume of 274,743 shares.
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