WEDNESDAY, 10.30AM:
The board of directors of Sentrachem on Tuesday decided to recommend that shareholders reject US-based chemicals giant Dow Chemicals Company’s R10,50 a share takeover offer, leaving the R2-billion proposed deal hanging in the balance.
The board said it believes the offer “does not adequately represent the value of Sentrachem’s business”. Sentrachem shares jumped over 5% or 55c to R10,80 following the board announcement.
The Dow offer is dependent on 90% acceptance by shareholders. Controlling shareholder Sankorp, with a 38,74% stake, last week accepted the offer. It is believed that Old Mutual, which directly and indirectly holds about 15% of Sentrachem, is not happy with the offer ad will reject it. If shareholders do not take up the offer, Dow will be left with two alternatives: to lower its acceptance threshold or to increase the price of its offer.
Prior to last year’s R261-million exceptional loss at agrochemicals subsidiary Sanachem, Sentrachem shares traded around R14. It is believed Dow’s main target in the Sentrachem deal is Sentrachem’s US-based subsidiary Hampshire, which holds lucrative contracts to supply chemical constituents of big-selling herbicide Roundup, made by US company Monsanto, whose patent expires in 2000.
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