Competing Bid for Chemical Maker Lifts Shares (TPCG, IOSP, BX)

Under the terms of its agreement with First Reserve and SK Capital, TPC will “carefully consider and evaluate the non-binding proposal from Innospec and its equity financing partner, and has authorized discussions and negotiations with them and is making arrangements to facilitate their due diligence review.” Innospec’s financing partner is a fund owned by Blackstone Group LP (NYSE: BX).

TPC noted in its announcement that it continues to recommend the original offer.

When TPC entered the agreement with First Reserve and SK Capital, we noted other deals involving chemical makers, some of which were successes and some of which were less so. Part of the problem is that chemical companies rely heavily on natural gas both as a fuel and as a feedstock. Rising natural gas prices threaten margins. The chemical makers alternate feedstocks — natural gas liquids and petroleum — are even more expensive.

Shares of TPC are up about 11% this morning, at $45.21 in a 52-week range of $18.49 to $47.61.

Paul Ausick