* Innospec says in interest of investors to withdraw the
* TPC recommends deal with First Reserve Corp, SK Capital
* TPC shares down 7 percent
Dec 3 Innospec Inc withdrew its offer
of about $745 million for chemical manufacturer TPC Group Inc
, potentially paving the way for the success of a rival
bid from First Reserve Corp and SK Capital Partners for the
TPC shares fell 7 percent to a near-one-month low of $44.57
in afternoon trading on the Nasdaq on Monday, while Innospec
shares were up about 2 percent.
First Reserve Corp and SK Capital Partners are offering $45
per share for TPC, lower than Innospec's $47.50, but TPC
recommended that its shareholders vote in favor of a deal with
the two private equity firms.
The two firms and TPC have repeatedly called the
$45-per-share offer superior, saying, among other things, that
it was unlikely that Innospec would close a deal this year.
Innospec Chief Executive Patrick Williams said on Monday
that it was in the interest of the company's investors to
withdraw the proposal.
At least two TPC shareholders -- Eagle Asset Management and
Sandell Asset Management, which together hold about 10 percent
of the company -- have shot down the offer from the two private
equity firms as inadequate.
Proxy advisory firm Institutional Shareholder Services has
recommended TPC stockholders vote for the proposed transaction
with First Reserve and SK Capital, the private equity firms said
in a statement.
Innospec, whose bid was backed by Blackstone Group LP
, was expected to submit a definitive proposal for TPC by
Dec. 5, when TPC shareholders are to vote on a deal with First
Reserve and SK Capital.
"At this late stage, we would not expect another buyer,
leaving TPC shareholders to vote for First Reserve and SK's $45
per share offer on Dec. 5," Oppenheimer & Co analyst Edward Yang
said in a note to clients.
However, Yang said he believes TPC merits a higher
valuation, and cut his price target on the company's stock by
$10 to $45 per share, citing increased likelihood of the First
Reserve and SK Capital proposal getting shareholder approval.
What makes TPC attractive is butadiene, analysts say. They
predict a long-term shortage of butadiene -- a by-product of
ethylene production -- as ethylene producers shift to cheaper
ethane, which yields lesser butadiene, from naphtha.
Butadiene is used to make synthetic rubber for tires and
other automotive products.