Rain is likely to punch it out to the end in the bidding war that could end up in one of the biggest acquisitions globally in the chemicals sector with a ticket value that could end up around $600 million.
HYDERABAD: US-based Oxbow Carbon & Minerals Holdings Inc has dragged Rain Commodities into a bidding war for the assets of Canadian Great Lakes Carbon Income Fund consisting of 73.56% ownership interest in the world’s biggest calcinated petroleum coke (CPC) maker, GLC Carbon USA Inc.
Rain is likely to punch it out to the end in the bidding war that could end up in one of the biggest acquisitions globally in the chemicals sector with a ticket value that could end up around $600 million.
Rain had acquired 20% ownership in the GLC Income Fund in March last year that pegged the enterprise value for GLC Carbon at $656 million. The company was looking at buying out the remaining equity and had entered into an agreement with the Fund at a price of C$11.60 per unit.
However, in a surprise move Oxbow entered the picture on March 7 with an offer of C$13 per unit, forcing Rain to increase the bid to C$13.25. In a later development, Oxbow bettered Rain’s revised bid with an offer of C$13.50 on Monday.
Oxbow is the world’s largest marketer of petroleum coke, a byproduct of oil refining, used in the production of electrodes for the steel and aluminum industries.
Acquiring GLC Carbon will clearly give Oxbow a strangle-hold over the global market. Likewise for Rain, the acquisition means adding to its own substantial CPC capacity through wholly owned subsidiary Rain Calcining which will give it 28% market share in the West and a footprint across the Middle East, US and Argentina.
GLC Carob has three plants in the US and one in Argentina.
Rain has five days to make a revised offer, a company official told DNA Money. The official said the management was yet to take a call on the matter. However, the gap between Oxbow’s revised offer and its own bid was minimal, he said, indicating the Rain could take the price beyond C$13.50.
Interestingly, Oxbow holds 5% equity in Rain Calcining which is set to be merged with the parent later this month.
In a positive for Rain, Great Lakes Carbon’s trustees had recommended unit holders to accept the bid on Monday. Rain stands to gain a break-up fee of C$17 million in case GLC accepts another offer.
However, it is unlikely that Rain will let Oxbow get away without a fight considering it has been working on the acquisition for the past one year and sees great value in it for the group, an analyst said.
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