More On TPC Takeover

The management of C₄ chemical supplier TPC Group is mounting a defense of its agreement to sell itself to the private equity (PE) firms SK Capital and First Reserve for $850 million. Critics say the $40.00-per-share offer lowballs the company’s true value and potential.

Leading the charge against the deal has been Sandell Asset Management, which owns a 7% stake in TPC. In a white paper, Sandell says TPC could be worth as much as $71.00 per share. The firm calls the $40.00 offer “a sweetheart deal for the PE buyers and management, allowing them to steal the company on the cheap from shareholders without a full and proper auction.”

In its proxy statement, issued last week to detail deal information to shareholders, TPC describes the months before the agreement. After SK and First Reserve first approached TPC in December 2011, nine other parties expressed interest in acquiring TPC. Six of these were “strategic bidders,” most likely other chemical companies. However, few of these interactions yielded solid acquisition proposals, and by the end of July TPC was negotiating with SK and First Reserve exclusively.

TPC also defends the planned sale by pointing to expensive and risky growth initiatives, which would be challenging for the firm to fund by itself. Last week, for example, the firm’s board approved a $265 million project to restart a dehydrogenation unit that would convert isobutane into isobutylene. TPC also wants to build a plant that would make butadiene from n-butane.