Mon 04/26/2021 13:41 PM
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Announcement

Takeaways
 
  • W. R. Grace & Co. and Standard Industries Holdings Inc. announced today, Monday, April 26, that they have entered into a definitive agreement under which Standard Industries Holdings will acquire Grace in an all-cash transaction valued at approximately $7 billion, including Grace’s pending pharma fine chemistry acquisition.
  • Standard Industries Holdings is the parent company of Standard Industries, a privately held global industrial company. Standard Industries’ related investment platform, 40 North Management LLC, is a long-standing stockholder of Grace.
  • Under the terms of the definitive agreement, Standard Industries Holdings will acquire all of the outstanding shares of Grace common stock for $70 per share in cash.
  • The closing of the transaction is subject to approval by Grace shareholders and the receipt of certain regulatory approvals.
  • The companies say they expect to close the transaction in the fourth quarter of 2021.

W. R. Grace & Co. and Standard Industries Holdings Inc. announced today, Monday, April 26, that they have entered into a definitive agreement under which Standard Industries Holdings will acquire Grace in an all-cash transaction valued at approximately $7 billion, including Grace’s pending pharma fine chemistry acquisition.

Standard Industries Holdings is the parent company of Standard Industries, a privately held global industrial company. Standard Industries’ related investment platform, 40 North Management LLC, is a long-standing stockholder of Grace.

Under the terms of the definitive agreement, Standard Industries Holdings will acquire all of the outstanding shares of Grace common stock for $70 per share in cash. The cash consideration represents a premium of approximately 59% over Grace’s closing stock price on Nov. 6, 2020, the last trading day prior to the announcement of 40 North’s initial proposal to acquire the company on Nov. 9.

Grace is a global producer of specialty chemicals and specialty materials. The company’s two reportable business segments are (1) Grace catalysts technologies and (2) Grace materials technologies. Grace’s catalysts technologies segment includes catalysts and related products and technologies used in petrochemical, refining and other chemical manufacturing applications. This business segment also includes Grace’s joint venture with Chevron, advanced refining technologies. Grace’s materials technologies segment comprises specialty materials, including silica-based and silica-alumina-based materials, used in pharma/consumer, coatings and chemical process applications.

In its latest 10-K, Grace reported $1.729 trillion in total net sales in 2020, with approximately 74% of its net sales being generated by its catalysts technologies segment and approximately 26% by its materials technologies segment.

Grace Net Sales by Reportable Business Segment in 2018-’20
 
 
(Source: Grace 10-K)

With respect to its catalysts technologies segment, Grace reported that approximately 36% of its total companywide net sales were generated from its polyolefin and chemical catalysts products, while approximately 38% were generated from its refining catalysts products.

In terms of its geographic footprint, Grace reported that approximately 73% of its 2020 consolidated sales were generated outside the United States. Grace’s largest geographic area in terms of net sales in 2020 was its Europe, Middle East, Africa operations, with the EMEA area generating $721 million in the company’s net sales.

Grace Net Sales by Geographic Area in 2018-’20
 
 
(Source: Grace 10-K)

Grace characterizes its competition in the polyolefin catalyst, catalyst supports and polypropylene process licensing industry as technology-intensive and names Univation, LyondellBasell, PQ and Lummus Novolen Technology as its principal competitors. With respect to FCC catalysts, Grace names Albemarle, BASF and Sinopec as its principal competitors, while the company names Johnson Matthey, Albemarle and BASF as its principal competitors in FCC additives. Grace also names Shell Catalysts, Albemarle, Haldor Topsoe, UOP and Axens as its principal competitors in hydroprocessing catalysts and Evonik, PQ and Nalco as its competitors in engineered materials.

Standard Industries Holdings is the parent company of Standard Industries, a privately held global industrial company operating in over 80 countries. Standard’s businesses comprise a range of holdings, technologies and investments across the building materials and solar solutions sectors, among others.

Standard’s operating companies include: (1) GAF, a roofing manufacturer in North America; (2) BMI, a roofing and waterproofing company in Europe; (3) Siplast, a manufacturer of advanced roofing and waterproofing systems; (4) GAF Energy, a company operating in the rooftop solar sector; (5) Schiedel, a manufacturer of flue-ducting, integrated stoves and ventilation system; and (6) SGI, an aggregates and mining company supplying specialized products to the North American building materials industry.

The closing of the transaction is subject to approval by Grace shareholders and the receipt of certain regulatory approvals. HSR antitrust approval in the United States will be required, and antitrust approval from the European Commission may also be required.

40 North, a holder of 14.9% of shares of Grace’s common stock, has entered into a voting agreement with Grace pursuant to which it has agreed to vote its shares in favor of the transaction.

Financing commitments have been provided by JPMorgan, BNP Paribas, Citi and Deutsche Bank as well as investment funds affiliated with Apollo Global Management as capital partner.

The transaction is not contingent upon the receipt of financing.

40 North, a holder of 14.9% of shares of Grace common stock, has entered into a voting agreement with Grace, pursuant to which it has agreed, among other things, to vote its shares of Grace common stock in favor of the transaction.

The companies say they expect to close the transaction in the fourth quarter of 2021.

Upon consummation of the transaction, Grace will operate as a stand-alone company within the portfolio of Standard Industries Holdings, which includes GAF, BMI Group, Schiedel, Siplast, SGI and GAF Energy.

Advisors

Goldman Sachs and Moelis are serving as financial advisors to Grace, and Wachtell is its legal advisor.

Citi and JPMorgan are serving as financial advisors to Standard Industries Holdings, and Sullivan & Cromwell is its legal advisor.
 
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