* Innospec raises offer to $47.50, valuing TPC at about $745
* TPC, Innospec renew negotiations
* TPC continues to back offer from First Reserve Corp, SK
By Swetha Gopinath
Nov 15 Chemical maker Innospec Inc
raised its bid for peer TPC Group Inc to about $745
million, aiming to thwart a rival offer from private equity
firms First Reserve Corp and SK Capital Partners.
Innospec raised its bid to $47.50 per share in cash, from
its earlier proposal of $44.00 to $46.00 per share. Blackstone
Group LP is providing equity financing to Innospec for
Investors bid up TPC Group shares 4 percent to $47.99 on
hopes of a bigger offer.
TPC suspended negotiations with Innospec last week, when
First Reserve Corp and SK Capital Partners raised their offer by
$5 to $45, valuing the company at $705 million.
TPC Group said on Thursday that it had renewed negotiations
with Innospec and allowed the company to resume due diligence.
"TPC's board reopening negotiations is a positive. And we
are getting closer to what we believe is fair value for the
company," said Eric Mintz, a portfolio manager at Eagle Asset
Management, the ninth-largest TPC shareholder as of Sept. 30.
Mintz said an offer of $50 per share would fairly value the
At the heart of the bidding war for TPC is butadiene, which
is used to make synthetic rubber for tires and other automotive
products and is a by-product of ethylene production.
But analysts predict a long-term shortage of butadiene as
ethylene producers shift from naphtha to cheaper ethane, which
yields less of the product.
"Our diligence so far has confirmed our initial findings
that TPC is a good strategic fit with Innospec," Chief Executive
Officer Patrick Williams said.
"We were disappointed to have been denied sufficient access
to complete our due diligence."
Innospec said it expects to submit a definitive proposal by
Dec. 5, when TPC shareholders are due to meet.
TPC continues to recommend that shareholders vote in favor
of a deal with First Reserve Corp and SK Capital Partners.
The company said on Thursday that it had started a cash
tender offer for $350 million of outstanding secured notes due
2017 in connection with the proposed deal with First Reserve
Corp and SK Capital Partners.
The tender offer was subject to the deal with the two
private equity companies going through, TPC said.
TPC has backed the offer from the two private equity
companies citing uncertainty about when a transaction with
Innospec would ultimately close, among other things.