BASF Makes All-Cash Proposal to Acquire Engelhard
January 03 2006 - 12:16PM
PR Newswire (US)
BASF Intends to Offer US$37.00 per Share for a Total of US$4.9
Billion LUDWIGSHAFEN, Germany, January 3 /PRNewswire-FirstCall/ --
BASF Aktiengesellschaft (Frankfurt: BAS, NYSE: BF [ADR], LSE: BFA,
SWX: AN), the world's leading chemical company, has made an
all-cash proposal to acquire all outstanding shares of common stock
of Engelhard Corporation (NYSE:EC), Iselin, New Jersey, USA, a
Fortune 500 company and leading supplier of goods for catalysis and
surface finishing, for US$37.00 per share or an aggregate of US$4.9
billion. This price represents a 23% premium above the December 20,
2005 closing price of Engelhard's stock of US$30.05 and a 30%
premium over Engelhard's 90-day average share price (VWAP) of
US$28.42 as of December 20, 2005. This price also represents a
premium to Engelhard's 2005 year-end closing price of US$30.15 and
to the four-year-high closing price of US$32.49 achieved on July
14, 2004. By acquiring Engelhard, BASF would become a leading
provider worldwide in the dynamically growing catalyst market.
"Engelhard is an excellent enhancement for the BASF portfolio,"
said Dr. Jurgen Hambrecht, Chairman of the Board of Executive
Directors of BASF Aktiengesellschaft. "By combining the R&D
activities of both companies, BASF would create a unique global
technology platform for catalysts and open up further growth and
innovation potential." The proposal reflects what BASF believes is
an opportunity for significant value for Engelhard's stockholders:
a robust premium over Engelhard's current stock price; and a fully
financed, all-cash transaction, with no significant regulatory
hurdles anticipated based on present knowledge. "We believe that
our all-cash proposal provides a compelling opportunity to achieve
significant value for Engelhard's stockholders," said Dr.
Hambrecht. "We hope that Engelhard's Board and management will
recognize this opportunity as well as the benefits for Engelhard's
employees. We look forward to continuing and strengthening business
relations with Engelhard's customers." BASF has made efforts to
negotiate a friendly transaction with Engelhard's Board of
Directors and management. BASF has said that its team is prepared
to meet with the Engelhard team to see whether Engelhard can
demonstrate value in addition to that discernible from the publicly
available information that might enable BASF to increase the price
that it proposes to pay for Engelhard by US$1.00 per share. These
efforts have been rebuffed. Following Engelhard's refusal to enter
into a dialogue with BASF, BASF earlier today sent the following
letter to Engelhard's Board of Directors: January 03, 2006 Board of
Directors of Engelhard Corporation 101 Wood Avenue Iselin, NJ
08830-0770 U.S.A. Attention: Mr. Barry W. Perry, Chairman of the
Board Dear Sirs: We appreciate having had the opportunity to meet
with Mr. Perry on December 21, 2005. We also appreciate the
conversations Mr. Perry and Dr. Hambrecht have had since their
initial meeting, as well as the fact that you have met during the
holiday season. However, we are disappointed that you and
Engelhard's management refuse to meet with us to further discuss
our proposal to acquire Engelhard and, in particular, that you
refuse to share with us information that may enable us to increase
the price we propose to pay for Engelhard's shares. We have clearly
indicated to Mr. Perry that we would be prepared to raise our
current offer price by as much as $1.00 per share if he agrees to
meet with us and the information provided supports such an
increase. In the absence of such additional information, we are
unable to improve our original offer of $37.00 per share. As we
have said, we believe our current proposal presents your
stockholders with a compelling opportunity for significant value
increase for their Engelhard shares. Given your position, we see no
alternative but to take our proposal directly to your stockholders.
We intend, in the near future, to commence a tender offer to
purchase all of the outstanding shares of Engelhard for $37.00 per
share in cash. In addition, to support our offer, we plan to
nominate candidates for election to Engelhard's Board of Directors.
The following are the principal terms of our proposal: Price and
Structure: BASF Aktiengesellschaft proposes to acquire Engelhard
through an all cash transaction at a price of $37.00 per share of
Engelhard stock, or an aggregate of approximately $4.9 billion for
the fully diluted equity of Engelhard. This price represents a 23%
premium above the December 20, 2005 closing price of Engelhard
stock of $30.05 (the day before the initial meeting of Mr. Perry
and Dr. Hambrecht) and a 30% premium over Engelhard's 90-day
average share price on December 20, 2005 of $28.42. This price also
represents a premium of 23% to Engelhard's 2005 year end closing
price of $30.15, and a significant premium to the four-year high
closing price of $32.49 achieved on July 14, 2004. Consummation of
our offer would be subject to the satisfaction of customary
conditions, including the tender of a majority of Engelhard's
shares on a fully diluted basis, the absence of a material adverse
effect on Engelhard and the necessary actions of Engelhard's board
of directors to render Engelhard's poison pill and Article Seventh
of its Certificate of Incorporation inapplicable to the
transactions we propose. The tender offer would be followed by a
second step merger in which the holders of all remaining Engelhard
shares would receive the same consideration of $37.00 per share in
cash. Regulatory: Our legal advisors and we have reviewed the
potential regulatory issues raised by a combination of our various
businesses and believe that the transaction will not raise any
material issues with the regulatory authorities in the United
States, Europe or elsewhere. We are confident that any regulatory
approvals that we do need would be obtained quickly. Financing: Our
proposal is not subject to any financing condition. We are an AA
rated company with sufficient cash and financing flexibility to
fully fund the proposed transaction. Board Approval: Our proposal
has been approved by both our Management Board and our Supervisory
Board. Although we are being forced to take our proposal directly
to your stockholders, it remains our strong preference to work with
you towards a negotiated transaction. As we have said, we are
prepared to meet with you and Mr. Perry at any time to discuss our
proposal. In particular, as Dr. Hambrecht proposed, we are prepared
to meet with Mr. Perry immediately to see whether he can
demonstrate value in addition to that discernible from our current
information that might enable us to increase the price that we
propose to pay for Engelhard by $1.00 per share. We hope that you
will decide to enter into a constructive dialogue regarding our
proposal. We are confident that, if we work together, we can
quickly consummate a transaction that is in the best interests of
the stockholders of both our companies. We are at your disposal to
discuss any aspect of our proposal. Sincerely, BASF
Aktiengesellschaft Hambrecht Bock BASF expects to commence a tender
offer for all of Engelhard's shares of common stock shortly, which
will be filed with the Securities and Exchange Commission (SEC)
together with all relevant tender offer documentation. The offer
will be subject to customary conditions, including that a majority
of Engelhard's shares of common stock, on a fully diluted basis,
are tendered into BASF's offer, and that Engelhard's board takes
all necessary actions to make its shareholder rights plan and the
supermajority voting provisions in its certificate of incorporation
inapplicable to BASF's offer. BASF's proposal is not subject to any
financing condition. BASF will host a conference call for analysts,
investors and media today, January 3, 2006, from 11:30 AM to 1.00
PM EST/5:30 to 7:00 PM CET. During this conference call,
journalists will be able to ask questions from 12:30 PM EST/6:30 PM
CET onwards. You may participate in this call by using one of the
following dial-in numbers: +1-866-291-4166 (USA); +44-207-107-0611
(UK); +49-69-22222-0593 (Germany) BASF's Chairman of the Board of
Executive Directors, Dr. Jurgen Hambrecht, and BASF's Chief
Financial Officer, Dr. Kurt Bock, will host this call. In addition,
the call can be accessed on the Internet at
http://www.basf.com/share. A webcast of the call will be available
after the conference call and can be accessed at
http://www.basf.com/share. Lehman Brothers is acting as financial
advisor and Shearman & Sterling LLP is acting as legal advisor
to BASF on the proposed transaction. BASF is the world's leading
chemical company: The Chemical Company. Its portfolio ranges from
chemicals, plastics, performance products, agricultural products
and fine chemicals to crude oil and natural gas. As a reliable
partner to virtually all industries, BASF's intelligent solutions
and high-value products help its customers to be more successful.
BASF develops new technologies and uses them to open up additional
market opportunities. It combines economic success with
environmental protection and social responsibility, thus
contributing to a better future. In 2004, BASF had approximately
82,000 employees and posted sales of more than EUR 37 billion. BASF
shares are traded on the stock exchanges in Frankfurt (BAS), London
(BFA), New York (BF) and Zurich (AN). Further information on BASF
is available on the Internet at http://www.basf.com/. This press
release is provided for informational purposes only and is neither
an offer to purchase nor a solicitation of an offer to sell any
securities of Engelhard Corporation. The proposed tender offer for
the outstanding shares of Engelhard common stock described in this
press release has not commenced. Any offers to purchase or
solicitation of offers to sell will be made only pursuant to a
tender offer statement (including an offer to purchase, a letter of
transmittal and other offer documents) filed with the Securities
and Exchange Commission ("SEC"). Engelhard stockholders are advised
to read these documents and any other documents relating to the
tender offer that are filed with the SEC carefully and in their
entirety when they become available because they will contain
important information. Engelhard stockholders may obtain copies of
these documents for free, when available, at the SEC's website at
http://www.sec.gov/ or by calling Innisfree M&A Incorporated,
the Information Agent for the offer, at +1-877-750-5837 (Toll Free
from the U.S. and Canada) or 00800-7710-9971 (Toll Free from
Europe). This press release contains forward-looking statements.
All statements contained in this press release that are not clearly
historical in nature or that necessarily depend on future events
are forward-looking, and the words "anticipate," "believe,"
"expect," "estimate," "plan," and similar expressions are generally
intended to identify forward-looking statements. These statements
are based on current expectations, estimates and projections of
BASF management and currently available information. They are not
guarantees of future performance, involve certain risks and
uncertainties that are difficult to predict and are based upon
assumptions as to future events that may not prove to be accurate.
Many factors could cause the actual results, performance or
achievements of BASF to be materially different from those that may
be expressed or implied by such statements. Such factors include
those discussed in BASF's Form 20-F filed with the SEC. We do not
assume any obligation to update the forward-looking statements
contained in this press release. Contact: Michael Grabicki Tel.
+49-621-60-99938 Cell: +49-172-749-18-91 Fax: +49-621-60-92693 US
contact: Timothy Andree Phone: +1-973-245-6078 Cell:
+1-973-519-5195 Fax: +1-973-245-6715 DATASOURCE: BASF AG CONTACT:
Michael Grabicki, Tel. +49-621-60-99938, Cell: +49-172-749-18-91,
Fax: +49-621-60-92693, ; US contact: Timothy Andree, Phone:
+1-973-245-6078, Cell: +1-973-519-5195, Fax: +1-973-245-6715,
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