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TPC hopes to woo investors opposing its $627.2 mln sale
Sept 5 |
Sept 5 (Reuters) - Chemicals maker TPC Group Inc plans a charm offensive to win over shareholders opposed to the company's $627 million sale to two private equity firms.
TPC's stock has been trading above the $40 per-share price offered by First Reserve Corp and SK Capital Partners ever since the deal was announced last week, and touched a three-month high of $42.18 on Wednesday.
Two top-10 shareholders, Sandell Asset Management and Eagle Asset Management, say they will vote against the deal.
TPC has maintained that the transaction is in the best interest of its shareholders, although it has released little detail on the structure of the deal or how the company would be managed under new ownership.
TPC's main product is butadiene, used in making synthetic rubber for tires and other automotive products, but its business has come under pressure this year as prices for the product have fallen sharply because of weak demand.
The deal, if it goes through, would be the culmination of a nine-month review of the company's strategic options.
Investors have complained that they have not been given enough information about the proposed sale, an issue TPC plans to address in a proxy statement.
"The company, in its proxy statement, will outline the benefits of the transaction and further discuss the comprehensive process the special committee conducted over the last nine months," a source close to the deal told Reuters.
Vaughan Nelson Investment Management, the seventh-largest TPC shareholder as of June according to Thomson Reuters data, is among those seeking more information.
"Based on current information we are not enthusiastic about the transaction and question whether it is the best path for shareholders, but (we) still have not made a final decision," said Chris Wallis, chief executive of Vaughan Nelson.
TPC, First Reserve and SK Capital declined to comment on whether a higher bid would be considered.
Eagle Asset portfolio manager Eric Mintz said he would not settle for an offer below $50 per share. "This (current offer) reeks of being an opportunistic bid and not at all in the best interests of the shareholders," he told Reuters.
In the options market, the largest open interest is on contracts that can be exercised at $45.
Sandell has been the most vocal opponent of the deal so far, and issued a statement saying the offer was "grossly" undervalued.
TPC shares have risen 80 percent this year but the offer was just 1 percent above the closing price the day before the deal was announced last Monday. The stock had already risen 20 percent since July 25 after Bloomberg reported that the company was in discussions to go private.
TPC was forced to write down the value of its inventory in the second quarter, although some analysts see the slump in its business as a short-term problem.
"Butadiene is a very volatile commodity. They (TPC management)are taking advantage of the drop in price to pass off this deal," Eagle Asset's Mintz said.
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