Huntsman Packaging Corp. has upped the ante in its attempt to buy Applied Extrusion Technologies Inc., boosting its total offer for the oriented film extruder to $138 million, up from $116 million.
AET's board of directors rejected Huntsman's initial bid of $10.50 per share in mid-August. The new bid offers $12.50 per share, a price that Huntsman officials said is 75 percent more than AET's 50-day average trading value as of Aug. 7. Huntsman announced it will withdraw the new bid at noon Sept. 24 if it is not accepted.
In a Sept. 10 letter to AET Chairman Amin Khoury, Huntsman Packaging President and Chief Executive Officer Richard Durham said a Huntsman/AET merger would benefit from Huntsman's ``extensive experience in integrating film and flexible packaging operations.''
Officials with both companies have had informal telephone contact, but have not discussed any terms of the proposed deal seriously, according to Scott Sorensen, Huntsman Packaging's chief financial officer.
An AET spokeswoman said the company's board had received the new offer and would review it before responding. AET has not set a date for its response.
In rejecting the initial bid, AET officials said the offer ``failed in all material respects to serve the best interests of AET shareholders.''
They added that AET's initiatives — including its recent purchase of Montell NV's global films business — will help it through a cyclical trough brought on by slumping film and resin prices and the industrywide opening of seven new large-scale film lines.
The deal seeks to unite two major players in different sectors of the extruded film industry. Salt Lake City-based Huntsman is a leader in polyethylene and PVC film, while Peabody, Mass.-based AET is now the world's second-largest maker of oriented polypropylene film after the Montell films acquisition.
Huntsman Packaging placed fifth in Plastics News' 1998 ranking of North American film and sheet manufacturers, with $767 million in relevant sales. AET ranked 22nd with $245 million in film sales. The company's total sales are $262 million.
AET's stock price has fluctuated as the market has reacted to Huntsman's actions. It climbed from $7 per share Aug. 7 to $9.25 on Aug. 14 as AET weighed Huntsman's first offer. AET's stock price trickled down Sept. 10 to close at $8.125.
The new Huntsman offer, announced the afternoon of Sept. 10, sent AET's stock up to $9.375 per share by 10 a.m. Sept. 11.
``A lot of people have drawn conclusions from [the stock movement],'' Sorensen said in a Sept. 11 telephone interview. ``It's not something we didn't expect. Given current market volumes, the market is having a really strong reaction to the offer.''