Standard Industries to acquire US WR Grace in $7bn deal

LONDON (ICIS)–Conglomerate Standard Industries, which manages activist investment firm 40 North, is to acquire US-based chemicals producer WR Grace in an all-cash transaction valued at around $7bn, the firm said on Monday.

Standard issued a “best and final” acquisition offer in early April of $70 per WR Grace share, up from earlier proposals of $60 and $65 that the company had rebuffed.

The deal should close in the fourth quarter, WR Grace said. The company would then become a private company and its shares would no longer be traded on the New York Stock Exchange.

Standard investment arm 40 North held a 14.9% stake in the company prior to the takeover offer and was WR Grace’s largest shareholder.

The purchase price represents a premium of 59% on the company’s share price on 22 November, the last day before the takeover offer became public, but offers little premium on the company’s share price at any point in the four years prior to the onset of the coronavirus pandemic.

Grace shares traded at around $44.05 the day before the offer was announced. The lowest its shares had traded in the four years preceding the pandemic was around $61 per share.

Grace’s board voted unanimously to approve the deal, which will result in the suspension of a planned dividend pay-out. The company will release first-quarter results on 6 May, but no press conference will be held.

The deal “enables our shareholders to realise immediate value at a significant cash premium”, said Grace CEO Hudson La Force.

The company is expected to operate as a standalone entity within Standard’s industrial portfolio, which also includes US-based roofing manufacturers GAF and Siplast, Luxembourg-headquartered roofing firm BMI Group and Austrian chimney manufacturer Schiedel.

40 North has been critical of Grace’s deal to acquire the fine chemistry services division of producer Albemarle, calling it “questionably timed”.

The Albemarle purchase was agreed in February 2021, after 40 North’s initial takeover offer.

40 North has been a substantial presence in the chemicals sector for years, and was one of the activists that had built up a position in Switzerland-based Clariant and had been expected to push for a break-up of the company before SABIC agreed to purchase those stakes in the company.

The Grace purchase indicates that catalyst producers  are firmly back on the radar of activist investors, according to analysts at Baader Bank last year.

WR Grace makes refinery catalysts and provides polypropylene (PP) process technology.

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