Feb. 1 (Bloomberg) -- Georgia Gulf Corp., North America’s largest maker of vinyl construction products, rejected Westlake Chemical Corp.’s increased takeover offer of $35 a share.
Westlake raised its unsolicited bid 17 percent from $30 previously, the Houston-based company said today in a statement. Atlanta-based Georgia Gulf rejected the bid, Westlake said. Westlake also said it’s willing to pay for the bid using its stock as well as cash, and that it won’t seek a proxy fight.
Westlake CEO Albert Chao, whose family owns about 69 percent of the company, is seeking to integrate his resin and pipe production with Georgia Gulf’s chemicals and vinyl lines. The combination would be the second-largest North American maker of polyvinyl chloride, or PVC, used in plastic pipe and siding.
Georgia Gulf narrowly averted bankruptcy after acquiring building products maker Royal Group in 2006, at the start of the worst housing slump since the Great Depression. Georgia Gulf is now poised to post record sales, according to analysts’ estimates, as confidence among U.S. homebuilders rises to a four-year high.
The initial proposal from Westlake valued Georgia Gulf at 6.4 times its earnings before interest, taxes, depreciation and amortization in the last 12 months, data compiled by Bloomberg show. That would have be less than at least 15 completed takeovers of diversified chemicals producers valued at $1 billion or more in the past 15 years, the data show.
Georgia Gulf said Jan. 16 it adopted a stockholder rights plan, also known as a poison pill, that allows existing shareholders to buy stock at a discount once a suitor acquires more than 10 percent of the outstanding shares.
In rejecting the offer on Jan. 16, Georgia Gulf said it was willing to engage in discussions. Georgia Gulf is insisting that talks be accompanied by a standstill agreement that would “unreasonably restrain” the company’s investors’ ability to consider the takeover bid, Westlake said Jan. 17.
--Editors: Simon Casey, Jessica Resnick-Ault
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