Nov 19 First Reserve Corp and SK Capital Partners believe their $705 million offer for chemical maker TPC Group Inc fairly values the company and they intend to close the deal before Christmas, a person familiar with the firms' thinking said.
Innospec Inc, another chemical manufacturer, raised its proposed bid for TPC to about $745 million last week, raising speculation about a counter-offer from the two firms.
The private equity firms are offering $45 per share, while Innospec is proposing to offer of $47.50, pending due diligence.
"...$45 is a good offer for the company. It's the only one for the company right now," said the person, stressing that there was no firm bid from Innospec.
"There's a deal on the table and First Reserve and SK Capital are moving ahead aggressively to close it," the person said.
The directors of TPC back the offer from First Reserve and SK Capital, saying, among other things, that Innospec was unlikely to be able to close a deal this year.
"Time matters to investors," the person said. "They (Innospec) wouldn't be able to close a deal in 2012 even if they did get to a firm bid."
QVT Fund and One East Partners, which together hold 21 percent of TPC, also back the $45 per share offer.
However, some shareholders say TPC is worth more than $45 per share, and at least two -- Eagle Asset Management and Sandell Asset Management, which together hold about 10 percent of the company -- have said they won't support the offer.
First Reserve and SK Capital originally offered $40 per share for TPC, which produces butadiene used to make synthetic rubber for tires and other automotive products.
TPC shares were trading at $47.89 on Monday, above Innospec's $47.50 per share offer.
Support from QVT and One East bodes well for completion of the deal, the person said, as they were they were "economically motivated."
"I have to take that as an indicator," said the person.
TPC shareholders will vote on the $45-per-share offer on Dec. 5.