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Mergers & Acquisitions

Minerals Technologies mulls hostile bid for Elementis

Elementis board rejects initial cash offer, expects share price to rebound

by Melody M. Bomgardner
November 16, 2020


The specialty minerals firm Minerals Technologies Inc. (MTI) disclosed that it made a bid on Nov. 5 to acquire the British specialty chemical firm Elementis. MTI, which is based in New York City, offered $1.41 per share, a 31% premium over Elementis’s Nov. 4 share price. The Elementis board rejected the all-cash offer, saying it significantly undervalues the firm and its future prospects.

Now, according to UK law, MTI has until Dec. 10 to announce an intention to make a formal, public offer for the company or say that it will not do so.

Mining for new business
Minerals Technologies would diversify its offerings with Elementis buy.
This data graphic shows two pie charts of business revenues from Mineral Technologies and Elementis.
Source: Companies
Note: Data is for 2019. Totals may not add to 100% due to rounding.

MTI revealed its rejected bid for Elementis just days after W.R. Grace disclosed that it had rejected a takeover offer from its largest shareholder, the investment firm 40 North Management.

Elementis and MTI both supply materials derived from mined minerals. Elementis minerals—including talc, chromium, and clay—are used in coatings, plastics, and rheology modifiers. The firm also produces specialty chemicals for personal care and other markets. It has 1,342 employees and reported 2019 sales of $874 million.

MTI has about $1.8 billion in annual sales of bentonite, precipitated calcium carbonate, and other minerals used in metal casting and oil and gas production. It has been working to expand its offerings in personal care, household, and pet care markets such as cat litter.

This year, most of Elementis’s business segments saw sales decline as the COVID-19 pandemic lowered demand for its industrial chemicals. The firm did not distribute a second-quarter dividend. Its share price sank to roughly $1.00 in early November from $2.43 in early March.

Elementis has pursued acquisitions of its own. In 2017 it bought SummitReheis, a manufacturer of aluminum-based antiperspirant active ingredients, and in 2018 it snapped up Mondo Minerals, a producer of talc-based additives.

A successful bid for Elementis, by MTI or another interested company, would need to account for the value of SummitReheis and Mondo as well as a potential recovery in share price as the pandemic wanes, Jaroslaw Pominkiewicz, a stock analyst at the investment bank Jefferies, wrote in a note to investors.



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