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 company 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 over Grace’s stock price on 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 then to $70 earlier this month.

“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 that had grown between the firms over the past 6 months. In a letter released with its $65 offer, 40 North said Grace “has nothing to show in terms of shareholder value creation” since spinning off its construction materials business in 2016.

40 North later said it had “serious reservations” about Grace’s “questionably-timed” acquisition of Albemarle’s fine chemistry business. Grace announced that purchase, for $570 million, in February amidst 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 significant antitrust issues to emerge. Grace’s two main businesses are silica products and catalysts for refining and chemical production. Standard Industries owns several companies, but none are in the chemical industry.

Standard 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 for $3.2 billion. Heyman’s firm GAF, which Standard still owns, attempted to take over Union Carbide in the 1980s.