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Georgia Gulf spurns Westlake offer

by Lou Whiteman | Published January 17, 2012 at 1:16 PM

Vinyl products manufacturer Georgia Gulf Corp. on Tuesday rejected an unsolicited $1.03 billion offer from rival Westlake Chemical Corp. as too low but expressed a willingness to hold talks about a potential buyout at a higher valuation.

Atlanta-based Georgia Gulf was put in play last week when Westlake, of Houston, went public with a $30 per share offer. The bid presented a premium of 51% over Georgia Gulf's 30-day volume-weighed average, but Georgia Gulf CEO Paul Carrico in a statement said his board had determined the proposal was "financially inadequate" and said shareholders were better off participating in a potential recovery as an independent.

"We believe the Westlake proposal is an opportunistic attempt to acquire the company's uniquely positioned assets as we recover from an unprecedented downturn in the industries we serve and a volatile public equity market, and thereby deprive our stockholders of the company's inherent value," Carrico said.

The company also said it had adopted a poison pill that would be triggered if any party acquires more than 10% of the company's shares outstanding. Westlake said last week that it owns about 4.8% of Georgia Gulf's shares.

Georgia Gulf ranks as one of the nation's largest manufacturer of vinyl construction products including window and door profiles, mouldings, siding, pipe and pipe fittings, and deck, fence and rail products. Westlake, which went public in 2004 and spent $255 million for an Eastman Chemical Co. business in 2006, makes a range of vinyl and polyvinyl chloride products including PVC piping, windows and fences.

Georgia Gulf also disputed Westlake's claim that it was not willing to engage in talks.

Carrico in a letter to Westlake CEO Albert Chao said "we have repeatedly told you we would be willing to engage in discussions with you to demonstrate the substantial underlying value of Georgia Gulf, and provide you with confidential information, provided that Westlake signed a customary confidentiality agreement that would protect Georgia Gulf's legitimate interests."

Westlake had said Georgia Gulf's insistence on a standstill agreement would "unreasonably restrain" shareholders from considering its proposal. In response to the rejection, Westlake said that Georgia Gulf's board "is once again standing in the way of its shareholders receiving immediate value and a substantial premium," adding that the action "demonstrates why Westlake had no choice other than to take our compelling proposal" directly to shareholders.

The suitor reiterated that it "would be willing to consider any opportunities that exist to justify increasing our offer," urging Georgia Gulf to come to the table.

Jones Day is counseling Georgia Gulf, including John Zamer, Robert Profusek, Michael McConnell, Walter Davis, Mark Hanson, Henry Klehm III, Bevin Newman and Michael H. Knight. C. Stephen Bigler and Srini M. Raju from Richards, Layton & Finger PA are Georgia Gulf's Delaware counsel.

-- Claire Poole in Houston contributed to this report.

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