Elementis rejected Innospec offer

Following press speculation, it has been confirmed that Innospec made an offer to acquire Elementis for £1.60/share on 31 March and that this was rejected on 9 April. Innospec is no longer pursuing the matter.

Elementis said that its board, together with its management and advisers, assessed the offer against its own valuation framework concluded that it “fell meaningfully short of the value creation potential” of the current strategy, particularly in view of “the strong momentum in the business” after a strong start to the year. They therefore unanimously rejected it.

In confirming this, Innospec said that a deal “would have created benefits for both sets of shareholders, given the compelling strategic fit”. It expected “future value creation substantially beyond the headline offer price through significant anticipated synergies and an expected re-rating of the Elementis business to Innospec’s materially higher valuation multiple”, the company added.

Dating back to 1844, Elementis is UK-based and listed in the FTSE-250, but most of its revenues come from North America. Its largest activity is in decorative and industrial coatings and it also makes chemicals for personal care, such as anti-perspirants, plus talc, chromium, and oil and gas drilling.

Meanwhile, Innospec is headquartered at Engelwood, Colorado, and employs about 1,900 in 24 countries, including a UK site at Ellesmere Port, near Liverpool. Its Performance Chemicals business supplies speciality chemicals for applications in personal and home care, agrochemicals and mining, among others. It is also active in speciality chemicals for oil and gas, and fuel additives.

Before the announcement, some questioned why UK-based Elementis did not consult shareholders. The company, which has about half of the market capitalisation of Innospec, had rejected a series of approaches from Minerals Technologies in late 2020 at £1.07, £1.17 and finally £1.30/share, citing similar reasons. Its shares stood at £1.36 after the news emerged.