UPDATE 2-Minerals Technologies snags clay company Amcol for $1.7 bln

Mon Mar 10, 2014 1:22pm EDT

* Imerys has said will not raise offer

* Minerals sees combined company annual sales of $2 bln

* Sees deal immediately adding to earnings

* Sees deal closing in first half of 2014

* Amcol shares down 2 pct, Minerals shares up 5 pct

March 10 (Reuters) - Minerals Technologies Inc said on Monday it would buy Amcol International Corp, which produces a type of clay used in everything from cosmetics to oil drilling, for about $1.7 billion as Imerys SA bowed out of a month-long bidding war.

After repeated offers and counter offers, Imerys said on Friday it would not raise it offer for Amcol to top Minerals' offer of $45.75 per share for the world's biggest producer of bentonite, also used in kitty litter.

Minerals stock was up 5.2 percent at $57.25, while Amcol shares were down 2 percent at $45.70 in afternoon trading on the New York Stock Exchange.

Even though Imerys has bowed out of the race for Amcol, it still has the chance to reenter. Amcol said on Friday that Imerys had four working days to match Minerals' bid.

Paris-based Imerys first offered to buy Hoffman Estates, Illinois-based Amcol on Feb. 11 for $41 per share, or about $1.6 billion, to help boost its presence in the United States.

New York-based Minerals stepped in with a raised offer three days later in a deal aimed at helping it diversify from producing calcium carbonate - a mineral used to whiten everything from paper to talc.

Since Imerys' first offer, Amcol shares have climbed about 27 percent through Friday and have traded at life-high levels. The stock trades at 20.7 times their earnings potential, a slight discount to the sector average of 21.3.

Minerals said on Monday buying Amcol would help double its annual sales to $2 billion. It said Amcol would immediately add to earnings once the deal closes, which is expected in the first half of this year.

Amcol will also offer Minerals some protection against swings in commodity prices and the company expects it will generate savings of at least $50 million in the near term.

Minerals said Amcol ended its merger agreement with Imerys and paid the company's U.S. subsidiary a termination fee of $39 million.

JP Morgan has committed to provide funding for the deal, the company said.

Cravath, Swaine & Moore LLP is legal counsel to Minerals and Lazard is the lead financial adviser. Kirkland & Ellis LLP is Amcol's legal counsel and Goldman, Sachs & Co is its exclusive financial adviser.

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