Lotte Chemical Corp has made an initial offer to buy U.S. chemicals maker Axiall Corp, coming in as a potential white knight for the $1.6 billion firm that is resisting a takeover attempt by Westlake Chemical Corp.
South Korea’s Lotte Chemical, which is building a U.S. ethylene cracker in a joint venture with Axiall, announced the offer in a regulatory filing on Tuesday but did not provide any terms.
Axiall, which also makes building products, rejected in April Westlake’s $3.1 billion buyout proposal, which included $1.5 billion in assumed debt, prompting Westlake to seek the replacement of Axiall’s board.
“Lotte Chemical will be seen as a white knight for Axiall,” said Park Young-hoon, an analyst at LIG Investment & Securities.
Lotte Chemical, part of hotel-to-retail conglomerate Lotte Group, said in the filing that its proposed takeover would help the company diversify its product portfolio and secure a stable customer base in North America for the U.S. cracker joint venture.
The potential deal will help Lotte Chemical become a “global integrated chemicals company”, it said.
Lotte Chemical said Axiall generated at least 2 trillion won ($1.72 billion) in cash per year, and that it was considering various methods to finance the acquisition including cash.
Axiall’s response to Lotte Chemical’s offer was not immediately known. A call to Axiall’s U.S. office outside normal business hours was not answered.
Shares in Lotte Chemical were down as much as 4.3 percent on Tuesday to their lowest levels in more than four months, weighed down by concerns about the price of a possible acquisition.
In April, Axiall rejected a revised cash-and-stock offer from Westlake Chemical, which was valued at $23.35 per share, an increase from a January proposal of $19.94.
Axiall shares last traded at $23.30, giving it a market value of $1.64 billion.
Late last month, Axiall said it was in talks with third parties on options including the possible sale of the entire company.
Separately, South Korea’s Hanwha Chemical Corp said on Tuesday its Hanwha Advanced Materials Corp unit had submitted a letter of intent to buy U.S.-based automotive materials supplier Continental Structural Plastics (CSP).
The deal could be worth about $600 million, the Maeil Business Newspaper reported.
Source: Reuters.com