15:27 PM | February 14, 2014 | Vincent Valk
Minerals Technologies (MTI) today launched a $42/share unsolicited bid for minerals firm Amcol International (Hoffman Estates, IL), setting in motion a possible bidding war with Imerys, which agreed to acquire Amcol on Wednesday for about $1.6 billion, or $41/share, including debt. Assuming a similar amount of debt, MTI’s bid would value Amcol at about $1.63 billion. MTI says the deal would be immediately accretive to the company’s earnings and could close during the first half of this year.
Amcol’s board said in a regulatory filing today that MTI’s bid “could reasonably be expected to lead to a superior proposal,” which would permit breaking the merger agreement with Imerys. Amcol will engage with MTI to perform diligence, exchange information, and negotiate a possible deal, but Amcol’s board “has not changed its recommendation in favor of the Imerys transaction.” Amcol’s merger agreement with Imerys includes a $39-million termination fee.
A deal with MTI would combine MTI’s capabilities in precipitated calcium carbonate with Amcol’s capabilities in bentonite, MTI says. Both companies have capabilities in fine particle technology and particle chemistry, MTI adds. "Strategically, it's a strong fit. We each have differentiated product and process technologies and similar geographic expansion initiatives that will be further advanced by the combination,” says MTI executive chairman Joseph Muscari.
Imerys reiterated its commitment to acquiring Amcol today. "We have an agreed-upon transaction with Amcol and remain committed to completing a deal that adds value for shareholders of both companies," a company spokersperson says. Imerys’s offer, which represents at 10.3-times Ebitda multiple, would enhance Imerys’s mineral product lines, the company says. Imerys runs a number of minerals businesses, including minerals for energy, filtration, and ceramics applications.
Markets greeted the news positively. Amcol shares rose $36, to around $45, this week, surging after news of both the Imeryis and MTI offers. MTI shares also rose after the bid was announced, currently trading at around $53, while Imerys shares shot up from around $62 to $64 after the initial merger announcement on 12 February.
“MTI has been searching for a deal that would complement its portfolio of minerals businesses and diversifty its end markets,” says Ivan Marcuse, an analyst with KeyBanc Capital Markets (Cleveland). “The addition of Amcol should expose MTI to different markets and reduce the cyclicality of the overall portfolio.” Imerys may submit a counteroffer in the near future. Marcuse adds.
Both Amcol and MTI recorded revenues a bit over $1 billion during 2013. Cravath, Swaine and Moore (New York) is MTI’s legal counsel on the bid, while Lazard (New York) is its financial adviser.