HOUSTON ― Westlake Chemical made an unsolicited, $1.03 billion bid for rival chemical company Georgia Gulf Corp, as it looks to increase its offerings of chemicals used to make plastics and building products.
Westlake offered to buy Georgia Gulf for $30 per share in cash, a 23 percent premium to the stock’s Thursday close on the New York Stock Exchange. Georgia Gulf’s shares surged 35 percent on Thursday morning to $33.09 — above Westlake’s bid.
In a letter to the target’s board, Westlake Chief Executive Albert Chao said Georgia Gulf has rejected the offer, first made in September.
“We have made numerous attempts to engage in meaningful dialogue with Georgia Gulf and have expressed our willingness to explore … whether opportunities exist that would justify increasing our proposal price,” Chao said in statement, noting that Georgia Gulf has declined to enter into talks on the bid.
A deal would make Westlake one of the largest North American producers of ethylene, a key building block for thousands of common chemicals.
Ethylene can be made using natural gas, which has become cheap and abundant in recent years due to natural gas deposits locked in shale formations around North America.
Westlake also has a large ethylene pipeline network in the U.S. Gulf Coast that will allow it to transport additional capacity from Georgia Gulf facilities. Several Georgia Gulf and Westlake plants operate near each other in western and middle Louisiana.
Westlake will also get increased capacity in vinyl resins, commonly used to make PVC pipe for construction.
Westlake, which has already bought up a 4.8 percent stake in Georgia Gulf, said its bid is not subject to a financing condition. Deutsche Bank and Morgan Stanley are advising Westlake.