Mexican PVC pipe and specialty chemicals maker Mexichem SAB de CV has made an unsolicited bid to acquire all outstanding shares of Netherlands pipe maker Wavin NV, the Dutch company said Nov. 22.
“Wavin announces that it has received an unsolicited, indicative non-binding proposal from Mexichem for the acquisition of all outstanding shares of Wavin,” it said in a news release.
Wavin said its management and supervisory boards “will carefully consider the ... proposal and explore the rationale, merits and risks for all Wavin's stakeholders of a possible business combination of Wavin with Mexichem.”
A key shareholder in Wavin, however, said Mexichem's offer of 8.5 euros per share is too low. The bid values the company at 430 million euros ($580 million).
Jack Jonk, head of equities at Amsterdam-based Delta Lloyd Group, told Dow Jones the offer shows “serious interest” in Wavin, but that Mexichem “has to acknowledge that the bid is too low.”
Delta Lloyd will discuss the offer with Wavin and Mexichem, Dow Jones reported. Delta Lloyd owns 7.9 percent of Wavin.
Mexichem, Latin America's largest PVC pipe and specialty chemicals manufacturer, based in Tlalnepantla, close to Mexico City, confirmed the approach to Wavin in a statement on the website of Mexican Stock Exchange, where its shares are listed.
“Mexichem intends to make a cash offer for all the ordinary Wavin shares in circulation,” it said, adding that “discussions are at a preliminary stage and, consequently, it's not certain at this moment in time that the transaction will go ahead.”
Major pipe player
If a deal is done, the Mexican company will become “the world's largest producer of pipes and solutions and the only one that is totally integrated,” Mexichem added.
On the Mexican Stock Exchange website, Mexichem confirmed that its offer is 8.50 euros ($11) per share. “This price takes into consideration the circumstances and the basics of the company [Wavin] and is the price that Mexichem considers fair for such a transaction,” Mexichem wrote in Spanish. “The offer is cash and is for all the ordinary Wavin shares in circulation.”
It added that the offer is subject to certain conditions, including the recommendation and total support of Wavin's board of directors and supervisory board.
Mexichem is being advised by Barclays Capital and Citigroup.
The statement from Wavin said its management and supervisory boards have taken note of “recent movements” in Wavin's share price. It added that it has hired Bank of America Merrill Lynch as its financial adviser and said that further announcements will be made, if and when appropriate.
Wavin is a major supplier of plastic pipe systems and solutions in Europe. It provides plastic pipe systems for, among other purposes, tap water, surface heating and cooling.
Headquartered in Zwolle, the Netherlands, it has manufacturing facilities in 18 European countries and one in China. It employs 6,400 and reported 2010 sales of about $1.6 billion.
Outside Europe, Wavin has a global network of agents, licensees and distributors, it says.
Mexichem embarked on a multi-million-dollar acquisition spree several years ago. Among numerous deals in which it has been involved, in December Rockwood Holdings Inc. of Princeton, N.J., agreed to sell its compounding business, AlphaGary Corp. of Leominster, Mass., to Mexichem for $300 million.
On Aug. 31, Mexichem announced it had arranged a $1 billion, three-year revolving credit line with six banks: Citibank, JP Morgan, HSBC, Santander, BBVA and Bank of America.