Standard Industries to acquire Grace

A five-month battle over the ownership of W. R. Grace & Co. came to an end on 26 April, when the company entered into a definitive agreement with Standard Industries Holdings will acquire it in an all-cash transaction valued at approximately $7.0 billion. This includes Grace’s pending acquisition of Albemarle Fine Chemistry Services (FCS).

Closing is expected to take place in Q4. This is subject to customary closing conditions, including approval by Grace shareholders and certain regulatory approvals, but is not contingent upon financing. Grace will then become a private company and will be delisted from the New York Stock Exchange. It will continue to operate as a stand-alone entity.

“Standard’s $7 billion investment in Grace reflects their confidence in the significant growth opportunities we have and enables our shareholders to realise immediate value at a significant cash premium,” commented Hudson La Force, Grace’s president and CEO.

Standard is the parent company of global industrial company Standard Industries, which includes GAF, BMI Group, Schiedel, Siplast, SGI and GAF Energy and operates in 80 countries, with 15,000 employees. Via its investment platform, 40 North, it already held 14.9% of Grace when it offered $60/share for the company on 6 November 2020.

Standard said that this was “the most credible path to unlock value for the company and its shareholders with a high level of certainty”. The Grace board unanimously rejected this, asserting that the offer “significantly undervalues the company and is not a basis for further discussion”. At the time, Grace was trading at $44.05/share.

In January, 40 North returned with an offer of $65/share. Grace replied that it was open to a sale providing that a transaction reflected its “full value”. Shortly after this, Grace agreed to acquire Albermarle FCS for $750 million, which 40 North described as “questionably-timed”. There was also a brief war of words, with 40 North claiming that its ability to conduct due diligence had been hindered by the limited information provided by Grace.

After a standstill agreement was reached that gave Grace time to seek other buyers, 40 North made what it described as its “best and final” offer of $70/share on 7 April. Signs that the parties were inching towards agreement emerged a week later, when they agreed to extend the nomination deadline for 40 North to submit director candidates for Grace’s board of directors at its 2021 shareholder AGM by 11 days to 26 April.