BASF, Engelhard Are Ready For A Showdown

Last week, Engelhard threw down the gauntlet; this week BASF accepted the challenge.

BASF has officially raised its bid for Engelhard by $1.00 to $38 per share, and has extended its offer for the catalysts and specialty chemicals firm to June 5. In addition, BASF has named five people to serve as its nominees for seats now up for election on the Engelhard board. Should the five nominees win seats on the board, they would constitute a majority of the nine-person board and would have the power to accept BASF???s merger offer and scuttle Engelhard???s own offer to shareholders.

BASF Chairman J??rgen Hambrecht pledges that ???if Engelhard???s shareholders don???t vote in favor of our nominees, we will allow our tender offer to expire on June 5 and turn our attention to other opportunities.??? Engelhard???s annual meeting will be held on June 2.

Since January, BASF has argued that its $4.9 billion, $37-per-share bid for Engelhard is fair. Last week, Engelhard revealed that BASF had raised its bid to $38 per share. Engelhard set up a showdown with BASF by offering instead to pay $45 for up to 20% of its own shares and to increase the size of its board from six to nine directors. It then proposed five directors to fill the three new seats and two that are to be vacated.

Engelhard argues that, if it wins, it will be able ???to pursue its strategic plan for two years without the distraction??? of BASF???s hostile takeover offer. However, Hambrecht contends that BASF???s ???offer for all of Engelhard???s shares provides greater value and more certainty to Engelhard???s shareholders.???