Engelhard
Board Announces Recapitalization Plan Including $45 Per Share
Self-Tender Offer For 20% Of Company's Shares
Engelhard Corporation (NYSE:EC), one of the largest surface and
materials science companies in the world, today announced that
its Board of Directors has unanimously approved a recapitalization
plan consisting of a self-tender offer for 26 million
shares for $45 per share in cash, continued execution of the
company's business strategy and incremental cost savings the
company expects will deliver $15 million annually beginning in
2007. The 26 million shares represent approximately 20% of the
company's outstanding shares including exercisable options.
Engelhard also announced that its board has unanimously rejected a BASF
proposal of $38 per share made in response to the company's
request for BASF to increase its offer following BASF's access to
non-public information. Approval of the recapitalization plan
completes a value-maximization process Engelhard's board
authorized in January after determining BASF's unsolicited offer
of $37 per share was inadequate and not in the best interests of
Engelhard shareholders because it does not adequately recognize
the company's current performance or future prospects. The board
made the same determination with respect to BASF's $38 per share
proposal.
（当初：BASF Intends To Offer US$37.00 Per
Share For a Total of US$4.9 Billion）
“After
concluding our process, the board has determined that the
recapitalization plan represents the best value-creation
alternative and is in the best interests of Engelhard
shareholders,” said Barry W.
Perry, Engelhard's chairman and chief executive officer. “Our business strategy is just
beginning to pay off as evidenced by the earnings momentum
inherent in our results for the fourth quarter of 2005 and the
extremely strong first-quarter earnings we announced separately
today. As we continue to execute that business strategy, this
recapitalization plan gives shareholders partial liquidity at an
attractive price of $45 per share while preserving their ability
to participate in the company's exciting future growth potential.”
In
reaching its decision, Engelhard's board, with the assistance of
its financial advisor, Merrill Lynch & Co., reviewed a broad
range of strategic alternatives to seek to maximize shareholder
value. The board's adoption of the recapitalization plan was
based on, among others, the following factors:
・ Superior Value
Versus BASF's $38 Per Share Proposal - Engelhard's board believes
that its $45 per share self-tender offer; the $15 million in
incremental annual cost savings; and the company's continued
ability to capitalize on its attractive growth opportunities and
business strategy will deliver greater value to its shareholders
than BASF's $38 per share proposal.
・ Accretion to
Earnings and Earnings Growth - The purchase of shares pursuant to
the recapitalization plan represents an attractive investment for
the company, and the recapitalization plan is expected to be
accretive to earnings per share (EPS) by approximately six cents
in 2007 and accretive to EPS growth.
・ Expected Strong
Price-to-Earnings Multiple - BASF launched its hostile offer when
Engelhard's stock was trading at a forward price-to-earnings
(P/E) multiple that was meaningfully lower than the historical
relationship that prevailed for several years to the forward P/E
multiples of key industry peers (Johnson Matthey and Umicore). In
addition, since the time of BASF's hostile offer, forward P/E
multiples for Engelhard's industry peers overall have generally
increased. Engelhard believes that its forward P/E multiple
should reflect a relationship to key industry peers more in line
with historical levels, and should benefit from (a) the strength
of Engelhard's earnings performance in recent quarters, (b) the
expected robust and sustained earnings growth for the years
ahead, and (c) the general rise in industry multiples since BASF
commenced its hostile offer.
・ Meaningful
Liquidity at an Attractive Price of $45 Per Share - The
recapitalization plan provides shareholders with a substantial
liquidity opportunity for some of their shares at the attractive
price of $45 per share, while preserving shareholders’ ability to realize the company's
outstanding future growth potential through appreciation of the
market price of the stock or a future sale of the company.
・ Continuing
Investment-Grade Credit Profile ? The company's financing of the
$45 per share self-tender offer should not interfere with its
ability to maintain the financial capability needed to execute
its strategic business plan and realize its growth opportunities.
Implementation of the recapitalization plan is expected to result
in continuance of investment-grade credit ratings for the
company.
Engelhard has committed financing, subject to customary
conditions, from Merrill Lynch and JPMorgan to initially fund the
$45 per share self tender. Permanent financing is expected to
comprise a mix of hybrid securities and floating- and fixed-rate
debt.
The self-tender offer is expected to commence during the week of
May 1, 2006 and expire at a date following the Annual Meeting of
Shareholders set for June 2, 2006. If, following the Annual
Meeting, individuals nominated by BASF constitute a majority of
the Engelhard board, the board will have the ability to withdraw
the self-tender offer. Closing of the self-tender offer would
also be subject to the Engelhard board not recommending
acceptance of an amended offer that BASF may choose to make as
well as to receipt of financing and other customary conditions.
The company also said that it expects to incur a charge or
charges over the second half of 2006 totaling $20 million related
to the $15 million in annual incremental cost savings.
As previously disclosed, as part of the company's exploration of
strategic alternatives, Engelhard entered into confidentiality
agreements and held meetings with a number of potential bidders
who were interested in all or parts of the company. As a result
of this process, no competitive, third-party transaction
materialized.
Expansion of Engelhard's Board
In connection with its recapitalization plan, Engelhard today
also announced that, at the Annual Meeting of Shareholders on
June 2, 2006, the board will increase its size from six to nine
members.
BASF has continued to threaten to commence a solicitation of
written consents from shareholders to increase the size of
Engelhard's board and fill the newly created vacancies with
hand-picked, BASF nominees. BASF has the ability to continue to
threaten and make such a consent solicitation regardless of
whether their director nominees lose at the Annual Meeting.
Furthermore, BASF can continue its consent solicitation as long
as it chooses ? there is no date by which the solicitation must
end.
In order to be able to successfully execute its business plan,
which is expected to deliver significant value to Engelhard's
shareholders, the company believes it cannot afford the
distraction resulting from either a lengthy consent solicitation
for a majority of the board or the threat that one could occur at
any time.
Accordingly, the board will nominate for election by the
shareholders at the Annual Meeting five nominees ? the two
incumbent Class I directors whose terms expire at the Annual
Meeting (Marion H. Antonini and Henry R. Slack) and three
individuals nominated to fill the newly created vacancies (Alain
Lebec, Howard L. Minigh and Michael A. Sperduto) who will be
spread among the board's three classes of directors.
As a result, the board is giving Engelhard shareholders the
ability to elect a majority of the newly enlarged board at the
Annual Meeting without the need for, or distraction of, BASF's
threatened consent solicitation.
Under the company's by-laws, shareholders, including BASF, may
nominate individuals for those newly created vacancies until the
close of business on May 8, 2006. The company would consider a
reasonable extension period if BASF determines it needs a longer
period of time to nominate three individuals for those vacancies
in addition to the two it already has nominated.
If Engelhard's five director nominees are elected, the effect
will be, among other things, to enable the company to pursue its
strategic business plan for two years without the distraction of
having to defend against a consent solicitation by BASF that
seeks or threatens to change a majority of the board to support
its inadequate hostile tender offer. The company strongly
believes this outcome is important for successful implementation
of the recapitalization plan, including its strategic business
plan, and, consequently, the company's ability to create value
for shareholders.
The company believes the board's decision to increase its size
provides both Engelhard and BASF with a fair opportunity to
present their cases to Engelhard shareholders and for Engelhard
shareholders to ultimately decide whether the recapitalization
plan or BASF's offer serves their best interests.
Engelhard believes the recapitalization plan will provide a
greater value-creation opportunity than BASF's $38 per share
proposal and urges shareholders to support all five of
Engelhard's nominees. The company's preliminary proxy materials
to be filed today with the Securities and Exchange Commission
(SEC) ? and the self-tender offer materials to be filed with the
SEC and distributed to shareholders -- set out in greater detail
the reasons for the belief that the recapitalization plan
represents the best value-creation alternative for Engelhard
shareholders and provide information on Messrs. Lebec, Minigh and
Sperduto. Additional material on the plan is also available on
www.engelhard.com.
The Engelhard board is, and has been, committed to maximizing the
value of the company for the benefit of its shareholders, the
company said, adding that this is a fight for the shareholders to
get fair value for their shares, not a fight for independence.
Engelhard's board urges its shareholders to vote for Engelhard's
board nominees, thereby sending BASF the message that they will
not sell the company at an inadequate price.
Engelhard Corporation is a surface and materials science company
that develops technologies to improve customers’ products and processes. A Fortune
500 company, Engelhard is a world-leading provider of
technologies for environmental, process, appearance and
performance applications. For more information, visit Engelhard
on the Internet at www.engelhard.com.
Forward-Looking Statements
This announcement contains forward-looking statements. These
statements relate to analyses and other information that are
based on forecasts of future results and estimates of amounts not
yet determinable. These statements also relate to future
prospects, developments and business strategies. These
forward-looking statements are identified by their use of terms
and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases,
including references to assumptions. These forward-looking
statements involve risks and uncertainties, internal and
external, that may cause Engelhard's actual future activities and
results of operations to be materially different from those
suggested or described in this announcement. For a more thorough
discussion of these factors, please refer to “Forward-Looking Statements” (excluding the first sentence
thereof), “Risk Factors” and “Key Assumptions” on pages 34, 35 and 38,
respectively, of Engelhard's 2005 Annual Report on Form 10-K,
dated March 3, 2006. Please also refer to “Forward-Looking Statements” and “Key Assumptions” contained in the investor
presentation captioned “Recapitalization
Plan” filed as an
exhibit on Form 8-K, dated April 26, 2006, and “Forward-Looking Statements” in the Offer to Purchase to be
filed by Engelhard in connection with its proposed self-tender
offer for additional information regarding such risks,
uncertainties and contingencies.
Investors are cautioned not to place undue reliance on any
forward-looking statement, which speaks only as of the date made,
and to recognize that forward-looking statements are predictions
of future results, which may not occur as anticipated. Actual
results could differ materially from those anticipated in the
forward-looking statements and from historical results due to the
risks and uncertainties described above, as well as others that
Engelhard may consider immaterial or do not anticipate at this
time. The foregoing risks and uncertainties are not exclusive and
further information concerning Engelhard and its businesses,
including factors that potentially could materially affect its
financial results or condition, may emerge from time to time.
Investors are advised to consult any further disclosures
Engelhard makes on related subjects in Engelhard's future
periodic and current reports and other documents that Engelhard
files with or furnishes to the Securities and Exchange Commission
(“SEC”).
No Offer or Solicitation. This announcement does not constitute
an offer or invitation to purchase nor a solicitation of an offer
to sell any securities of Engelhard. The proposed self-tender
offer by Engelhard described in this announcement has not
commenced. Any offers to purchase or solicitation of offers to
sell will be made only pursuant to a tender offer statement
(including an offer to purchase, a letter of transmittal and
other offer documents) filed by Engelhard (“Engelhard's Tender Offer Statement”) with the SEC. ENGELHARD's
SHAREHOLDERS ARE ADVISED TO READ ENGELHARD's TENDER OFFER
STATEMENT AND ANY OTHER DOCUMENTS RELATING TO THE TENDER OFFER
THAT ARE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Additional Information and Where to Find It. Engelhard also plans
to file with the SEC and mail to its shareholders a definitive
Proxy Statement on Form 14A relating to the 2006 annual meeting
of shareholders and the election of directors (the “2006 Proxy Statement”) and other important information.
Engelhard and its directors and certain of its officers may be
deemed, under SEC rules, to be participants in soliciting proxies
from Engelhard's shareholders. Information regarding the names of
Engelhard's directors and executive officers and their respective
interests in Engelhard by security holdings or otherwise is set
forth in Engelhard's Proxy Statement relating to the 2005 annual
meeting of shareholders (the “2005 Proxy Statement”). Additional information
regarding the interests of such and other potential participants
will be included in the 2006 Proxy Statement and other relevant
documents to be filed with the SEC in connection with Engelhard's
2006 annual meeting of shareholders that will be filed with the
SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE 2006
PROXY STATEMENT AND OTHER MATERIALS FILED WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. On January 9, 2006, BASF
filed a Tender Offer Statement on Schedule TO, which has been
amended (the “BASF Tender Offer
Statement”). In response to
the BASF Tender Offer Statement, Engelhard has filed certain
materials with the SEC, including the Schedule 14D-9 filed on
February 2, 2006, and which has been amended, (the “Schedule 14D-9”).
Investors and security holders may obtain a free copy of
Engelhard's Tender Offer Statement (when it is filed and becomes
available), Schedule 14D-9, 2005 Proxy Statement, 2006 Proxy
Statement (when it is filed and becomes available), BASF's Tender
Offer Statement and other documents filed by Engelhard or BASF
with the SEC at the SEC's website at http://www.sec.gov. In
addition, investors and security holders may obtain a free copy
of each of the Schedule 14D-9, 2005 Proxy Statement, 2006 Proxy
Statement (when it is filed and becomes available), Engelhard's
Tender Offer Statement (when it is filed and becomes available),
as well as Engelhard's related filings with the SEC, from
Engelhard by directing a request to Engelhard Corporation, 101
Wood Avenue, Iselin, New Jersey 08830, Attention: Investor
Relations or at 732-205-5000, or from MacKenzie Partners, Inc. by
calling 1-800-322-2885 toll free or at 1-212-929-5500 collect or
by e-mail at Engelhard@mackenziepartners.com.
2006/8/1
BASF
BASF begins to rename Engelhard worldwide
Rebranding starts in United States with BASF Catalysts LLC
BASF today (August 1, 2006) announced that an important step in
the integration process of Engelhard into the BASF Group has been
accomplished with the registration of a new corporate name - BASF Catalysts LLC
-
in the United States. BASF will extend its brand to Engelhard
companies in other regions of the world within the next months
based on local registration requirements.
“This rebranding
signifies a key milestone in the integration process as it brings
together BASF’s brand strength
and Engelhard’s strong
reputation for innovation and quality,” said Klaus Peter Lobbe, BASF
Board member responsible for North America. “Engelhard is an integral part of
BASF as the world’s leading chemical
company.”
Engelhard businesses not included in the Catalysts division will
also operate under this new corporate entity until plans are
finalized for the businesses in Appearance and Performance
Technologies and Ventures to be transferred to other existing
BASF business units.
BASF is the world’s leading chemical
company: The Chemical Company. Its portfolio ranges from
chemicals, plastics, performance products, agricultural products
and fine chemicals to crude oil and natural gas. As a reliable
partner to virtually all industries, BASF’s intelligent system solutions and
high-value products help its customers to be more successful.
BASF develops new technologies and uses them to open up
additional market opportunities. It combines economic success
with environmental protection and social responsibility, thus
contributing to a better future. In 2005, BASF had approximately
81,000 employees and posted sales of more than Euro 42.7 billion.
BASF shares are traded on the stock exchanges in Frankfurt (BAS),
London (BFA), New York (BF) and Zurich (AN). Further information
on BASF is available on the Internet at www.basf.com.