Mayfield Heights, Ohio-based Ferro Corp. confirmed May 9 that its board of directors is “exploring possible strategic alternatives” for the company.
Ferro said it has retained Lazard Frères & Co. as its financial adviser.
The performance materials supplier said in a short news release that “no decision has been made to engage in a transaction or transactions resulting from the board's exploration of strategic alternatives, and there can be no assurance that any transaction will occur or, if undertaken, the terms or timing thereof.”
Ferro makes plasticizers, pigments, liquid colors and polymer additives used in the plastics industry.
Reuters reported May 6 that an auction for Ferro “is in the second round of bidding and has attracted interest from other companies and private equity firms.” It cited sources “familiar with the matter” who asked not to be identified because the matter is confidential.
Ferro shares rose sharply on Friday and closed at $13.92. Reuters said that gives the company a market capitalization of $1.15 billion.
In March, Ferro shareholder FrontFour Capital Group LLC, a Greenwich, Conn.-based hedge fund, called on the company to explore a sale.
“Given Ferro's significant operational improvement, strong market share positions, robust free cash flow generation and deep acquisition pipeline, we believe that Ferro would receive strong interest from both strategic and private equity buyers, at a price reflecting a significant premium to Ferro's current trading levels,” FrontFour said at the time.
Last month, though, FrontFour sent another letter indicating frustration with Ferro's board and management.
From the April letter:
“Despite being a significant, long-term shareholder of Ferro, we are deeply troubled that the board failed to publicly acknowledge our letter, which we interpret to mean that the board does not agree with our views on creating shareholder value and/or is unwilling to publicly commit to a value enhancing strategic path. Subsequently, on March 15, Bloomberg reported that Ferro had recently rebuffed a takeover approach from Apollo Global Management LLC. Ferro then canceled its long-scheduled appearance at the Gabelli Specialty Chemicals Conference, which took place on March 23, citing "market rumors." We are highly concerned that the board may not be engaging with potential buyers while refusing to provide transparency to shareholders as to the strategic path of the company.
Ferro's products include glass-based coatings, pigments and colors, and polishing materials. Its products are sold into the building and construction, automotive, appliances, electronics, household furnishings and industrial products markets.
The company has about 4,860 employees globally and reported 2015 sales of $1.1 billion.
