MONDAY, 10.30AM:
AMERICAN Dow Chemical Company has increased its offer to take over embattled chemical giant Sentrachem after two weeks of stiff negotiations following the refusal of Dow’s initial R10,50 a share offer by Old Mutual, Sentrachem’s second-largest shareholder.
Dow at the weekend announced a raised offer of R11,75 a share. The original offer was made to and accepted by majority shareholder Sankorp (38,7%). The offer was not communicated to the Sentrachem board, effectively making it a hostile takeover, which was backed up by Sentrachem’s board calling on minorities to reject the offer, which it said did not reflect the true value of Sentrachem’s business.
Yesterday, the parties said the Sentrachem board will endorse the new offer and recommend that shareholders accept it, ending the possibility of a hostile bid. Old Mutual, with 20% of Sentrachem’s shares, said it will support the offer.
It is believed that part of the motivation for Dow’s increased offer was interest from other international chemical conglomerates, including Monsanto and Rhone-Poulenc. A rival bid from one of these may still prove to be the biggest threat to the Dow deal. The interest by other international groups is seen as confirmation that Dow’s initial offer was too low.