ZWOLLE, NETHERLANDS (Dec. 23, 10:45 a.m. ET) – Leading European pipe maker Wavin NV has granted due diligence access to Mexichem SAB de CV, after the Mexican-based chemicals giant increased its offer to 10 euros ($13.07) per share.
Mexichem has been stalking its target for some time, seeing an initial bid of 8.5 euros per share be rebuffed, then an improved offer of 9 euros earlier this month also failing to move the Wavin board, which described it as “materially undervaluing the company and its prospects.”
However the Wavin's change of heart appears to have been prompted by both the improved bid and what Wavin called “good progress” in discussions about what it said were the “non-financial terms” of a possible offer. The new bid values Wavin at more than 500 million euros ($652 million).
A spokesman for Wavin told PRW the talks included conversations about corporate governance issues, strategic considerations, organizational structure and the future for the company's management and staff.
“After these talks we concluded the offer of 10 euros a share was at a level to grant them access to the books,” he added.
Mexichem is expected to begin looking at Wavin's books in the second week in January. The spokesman said he could not comment on how long the due diligence process would last, or whether Wavin might look to hold out for a better offer following the investigation.
Despite the due diligence agreement both companies stressed that offer talks would continue, with everything still up for grabs.
“At this stage no assurance can be given that these discussions will result in a transaction and whether or not the Wavin boards will arrive at a recommendation of an offer by Mexichem,” a statement from Wavin said.
Meanwhile, the Dow Jones new service reported that Dutch insurer Delta Lloyd Groep said the 10 euros offer is still not good enough. Delta Lloyd owns a 7.9 percent stake in Wavin.