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First Reserve, SK Capital raise bid for TPC Group

9 Nov 2012

First Reserve and SK Capital have fought back in the battle to buy chemical maker TPC Group by raising their offer to match a rival bid by Blackstone and Innospec.

The buyout houses have raised their offer by $5 per share to $45, bringing it in line with Innospec’s Blackstone-backed bid of between $44 and $46 per share.

First Reserve and SK Capital had previously had their $40-a-share bid recommended by the TPC board, a deal that valued the company at $627m.

That offer was met with anger from the company’s third-largest shareholder, Sandell Asset Management, which said it “grossly undervalues” TPC – despite representing a 20 per cent premium to the company’s last closing price before details of the deal emerged.

TPC said its board had recommended shareholders vote in favour of the latest offer from the two private equity firms, which values the company at about $705m.

The company said it has also ended talks with Innospec and ceased providing due diligence information.

Chris Wallis, chief executive of TPC shareholder Vaughan Nelson Investment Management, told Reuters, “This is a very modest increase to the original offer (from the PE firms) and is insufficient to materially change my views of the original offer.”

Texas-based TPC produces chemicals used in synthetic rubber, fuel additives, plastics and surfactants, but has seen demand for its main tyre product dry up in recent months.

First Reserve and SK’s previous bid was valued at $850m including net debt, and was expected to close in the fourth quarter.

Financing was provided by Bank of America Merrill Lynch, Morgan Stanley, and Jefferies and its affiliates.

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