W.R. Grace agrees to talks with $4.3B bidder

W.R. Grace & Co. said Friday it was willing to discuss a possible sale to 40 North Management after the New York company boosted its unsolicited offer for the Columbia specialty chemical giant to $4.3 billion.

In a letter to 40 North executives and shared publicly, Grace President and CEO Hudson LaForce said the company’s board discussed the revised proposal, which increased 40 North’s offer from $60 to $65 a share cash for Grace’s stock.

“We are willing to discuss a sale of Grace to 40 North in the context of our ongoing review of strategic alternatives,” LaForce wrote. “Any transaction would need to be at a price level that reflects the full value of Grace for its shareholders.”

40 North, the investment arm of New York-based building materials company Standard Industries, believes it can reverse what it sees as years of underperformance at Grace.

Grace shares soared 7.8% Friday afternoon to close at $63.25 each after the letter was released.

Grace had rejected 40 North’s earlier offer in November to buy the company for $4 billion, saying the bid “significantly” undervalued the company. The revised offer from 40 North, Grace’s largest shareholder, represents a 62% premium over Grace’s closing share price on Oct. 13, the day before a 40 North representative resigned from Grace’s board ahead of making the initial offer.

LaForce talked up Grace’s prospects in his letter.

“Grace’s opportunities for continued growth and value creation are strong, particularly as our end markets recover from the disproportionate displacement resulting from the COVID-19 pandemic,” wrote LaForce, citing recent its financial results. “Based on our recent growth investments and operating plan, we are confident in our robust opportunities for continued growth and high profitability.”

He said Grace was willing to share confidential information “that would support a full valuation of Grace.”

The company, which counts a large plant in Curtis Bay among its manufacturing facilities, develops and makes catalysts and related products used in energy, refining and chemical manufacturing, and chemicals used in making pharmaceutical, cosmetic and dietary supplement products. It sells to customers in more than 60 countries and employs 4,000 people.

Grace spun off GCP Applied Technologies in February 2016, splitting into two publicly traded companies. GCP, a construction products business, is headquartered in Cambridge, Massachusetts, while Grace’s silica and catalyst businesses kept the W.R. Grace name and remained based in Columbia. Grace had emerged from a 13-year bankruptcy reorganization caused by its asbestos-related obligations in early 2014.