Grace agrees to $7 billion takeover by Standard Industries

After 6 months of sometimes contentious back-and-forth, the specialty chemical maker W. R. Grace has agreed to be taken private by the industrial conglomerate Standard Industries Holdings in a transaction that values Grace at about $7 billion, including debt.

Standard will acquire Grace’s outstanding stock for $70 per share, a 59% premium on Grace’s stock price Nov. 6, 2020, the last trading day before 40 North Management, Standard’s investment arm, first approached Grace with a $60-per-share takeover offer. After being rebuffed, 40 North raised its offer to $65 in January and to $70 on April 1.

“We are confident that our agreement with Standard Industries Holdings is the best path forward for Grace and our shareholders,” Grace CEO Hudson La Force says in a statement released by both parties.

The unity portrayed in the statement belies the friction between the firms over the past 6 months. In a letter released with its $65 offer, 40 North said that Grace had “nothing to show in terms of shareholder value creation” since it spun off its construction materials business as GCP Applied Technologies in 2016.

The investment firm later said it had “serious reservations” about Grace’s “questionably-timed” acquisition of Albemarle’s fine chemistry business. Grace announced that $570 million purchase in February amid its fight with 40 North. The purchase will add about $160 million in annual sales and significantly increase Grace’s modest presence in fine chemicals.

With the hatchets now buried between the two firms, Kevin McCarthy, a stock analyst who follows Grace for Vertical Research Partners, told clients in a research note that he doesn’t expect other bidders or any major antitrust issues to emerge. Standard owns several companies, but none are in the chemical industry.

It does have a chemical connection, though. According to the Financial Times, Standard’s co-CEOs, David J. Millstone and David S. Winter, both married daughters of the investor Samuel Heyman. Heyman’s family owned the chemical maker International Specialty Products for many years before selling it to Ashland in 2011. And Heyman’s firm GAF, which Standard now owns, attempted to take over Union Carbide in the 1980s.