The $1.50-a-share hostile bid by Chemtrade Logistics Income Fund (CHE_u.TO) for fellow chemical supplier Canexus (CUS.TO) has produced the usual rhetoric.
Toronto-based Chemtrade accuses the Canexus board and management of “significant destruction of shareholder value.” Canexus has told its own shareholders that Chemtrade refuses “to come to the table with a bona fide offer that gives you full and fair value for your company.”
But in an interview with BNN on Thursday, Canexus chief executive Douglas Wonnacott conceded that while he thinks the offer is too low, combining the businesses does make sense.
“There’s a clear strategic fit between the companies,” Wonnacott said. “Chemtrade is operating in the same end-use markets are we are. It’s pulp and paper, it’s water treatment and it’s oil and gas – so significant synergies there.”
He said the price being offered is the obstacle: “Effectively it does come down to value.”
Toronto-based Superior Plus (SPB.TO) pulled out of a friendly deal to buy Canexus this summer after the U.S. Federal Trade Commission opposed the transaction because of its effect on competition in sodium chlorate. That all-stock deal valued the Canexus equity at $316 million. Including assumed debt, the deal was worth about $932 million.
Canexus traded at $1.53 per share in midday trading on the Toronto Stock Exchange on Thursday, 3 cents above the Chemtrade bid, for a market cap of about $290 million.
Advertisement