Minerals Technologies Inc (MTX.N) offered to buy AMCOL International Corp ACO.N for $1.36 billion, topping a bid from France's Imerys (IMTP.PA) for the company that owns large reserves of a key mineral used in construction and energy industries.
Minerals Technologies offered $42 per share for AMCOL, which produces bentonite from its mines in the United States, Australia, China and Turkey, while Imerys offered $41 per share on Wednesday.
AMCOL's shares rose 9 percent to $44.98, indicating that some shareholders may be expecting a higher bid.
Demand for bentonite, nicknamed "the mineral of a thousand uses," is expected to rise with growing construction activities across the world.
Minerals Technologies produces calcium carbonate, used to whiten everything from paper to talc.
AMCOL did not immediately respond to calls and emails seeking comments. Imerys wasn't immediately available.
"Although not confirmed, we understand that Minerals Technologies and AMCOL had conversations last year, but stalled when AMCOL went into exclusive talks with Imerys," Wedbush Securities Inc analyst Al Kaschalk wrote in a note to clients.
Imerys's bid for AMCOL has been unanimously approved by the boards of both companies.
AMCOL may have to accept Minerals Technologies' offer as per business laws in Delaware, Kaschalk said.
AMCOL is incorporated in Delaware, where public companies are typically required to accept the highest offer in a deal.
Minerals Technologies said the deal would add to earnings upon closing, likely in the first half of 2014.
Both Minerals Technologies and AMCOL recorded sales of more than $1 billion in 2013.
"Minerals Technologies' and other potential strategic buyers would need to have a more constructive view on AMCOL's product development pipeline and the ability to convert such potential to commercial sales," Kaschalk said.
He raised his price target on AMCOL's stock to $42 from $41 to reflect the latest offer price.
Minerals Technologies shares rose about 1 percent to $53.22 in morning trading on the New York Stock Exchange on Friday.
(Reporting by Swetha Gopinath and Garima Goel in Bangalore; Editing by Savio D'Souza and Don Sebastian)