Westlake sweetens bid, Georgia Gulf still declines

By Frank Esposito
Senior Staff Reporter

Published: February 1, 2012 6:00 am ET

Related to this story

Topics Materials Mergers & Acquisitions Suppliers Construction Pipe/Profile/Tubing
Companies & Associations

HOUSTON (Feb. 1, 3:25 p.m. ET) — Westlake Chemical Corp.’s second offer to buy competitor Georgia Gulf Corp. received the same response as the first did: A resounding “no.”

This time, Houston-based Westlake offered $35 per share, according to a Feb. 1 news release. That’s 17 percent higher than the $30 offer it announced on Jan. 17. The new deal values Atlanta-based Georgia Gulf at about $1.2 billion.

Westlake officials pointed out that the new offer represents a 77 percent premium to Georgia Gulf’s 30-day average price, but Georgia Gulf officials countered in their own Feb. 1 news release that the $35 offer is less that what its stock traded for on Jan. 31. The price has gone up since Westlake went public with its offer.

“It continues to be the unanimous view of the board that $35 per share...is far from compelling and does not represent an appropriate price for us to discuss the sale of Georgia Gulf on a one-off basis,” Georgia Gulf president and CEO Paul Carrico said in the release. “As we have previously stated, we believe that Georgia Gulf is well positioned for value creation for its stockholders.”

The proposed deal would create a major North American PVC presence as well as a business with annual pipe, profile and tubing sales of almost $1.5 billion.

In Westlake’s release, president and CEO Albert Chao argued that “given marketplace uncertainties and the nature of the industry, we believe Georgia Gulf’s standalone prospects as an unintegrated PVC producer carry significantly greater risks than the certainty we are offering.”

Chao added that Westlake has had discussions with a number of Georgia Gulf shareholders who “are very interested in seeing this transaction completed.” Westlake already owns almost five percent of Georgia Gulf shares.

If the deal goes through, it could have a big impact on the North American plastics market. Both firms rank among the region’s largest PVC makers. A combined Westlake-Georgia Gulf PVC business would ranks as the second-largest PVC maker in the U.S./Canada region, with around 4.3 billion pounds of annual capacity and a market share of about 26 percent. The combined business would trail only Shintech Inc. in U.S./Canada market share. Such a move also would reduce the number of North American PVC makers to four.

Plastics News recently spoke with a U.S. PVC processor who does business with both Georgia Gulf and Westlake. Based on his knowledge of both companies, the buyer said he was concerned that Westlake would make significant changes to Georgia Gulf’s structure if its offer is accepted.

“I don’t think Westlake will leave things (at Georgia Gulf) alone,” he added.

In the first nine months of 2011, Georgia Gulf’s sales grew 20 percent to more than $2.5 billion, and its profit more than doubled to $61 million. But in 2010, the firm’s profit had fallen almost 70 percent, even as sales grew more than 40 percent to $2.8 billion. Georgia Gulf employs 3,600 at 14 sites in the U.S. and Canada.

Westlake employs about 2,000 at 16 global sites — 14 in the U.S., one in Canada and one in China. The firm posted sales of $3.2 billion in 2010 and sales of almost $2.8 billion in the first nine months of 2011. Westlake’s nine-month profit was up 40 percent from the year-ago period.


Comments

Westlake sweetens bid, Georgia Gulf still declines

By Frank Esposito
Senior Staff Reporter

Published: February 1, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Ford moving forward in carbon fiber for 'high volume' use

April 17, 2015 10:21 am ET

Ford Motor Co. has signed a deal with a carbon-fiber manufacturer to jointly explore “high-volume” automotive uses for the lightweight...    More

Image

Force majeure declared at six European sites since mid-March

April 17, 2015 1:10 pm ET

At least six European resin makers have declared force majeure on polyethylene, polypropylene and related products since mid-March, leading to higher ...    More

Image

Executives step down from Star Thermoplastics

April 17, 2015 12:56 pm ET

Executives Randall Fortin and Larry Johnson no longer are with materials firm Star Thermoplastics Alloys & Rubbers Inc.    More

Image

Zoltek expanding CF capacity in Europe

April 17, 2015 10:12 am ET

Leading carbon fiber group Zoltek Corp. has signed a strategic agreement with the Hungarian government to expand its operation in northern Hungary,...    More

Image

Hanwha Azdel adds capacity in Lynchburg

April 16, 2015 2:01 pm ET

Composite maker Hanwha Azdel Inc. will add space and a new production line at its Lynchburg, Va., production facility, the company announced April 16.    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 15, 2015 - September 17, 2015Plastics Caps & Closures - September 2015

More Events