Investment firm 40 North to acquire Grace for $7 billion

10:46 AM, 3rd May 2021
W R Grace & Co head office in Columbia, US. The company has been acquired by 40 North Management LLC for $70.00 per share in cash or approximately $7 billion. (File Photo)

COLUMBIA/NEW YORK, US: W R Grace & Co and Standard Industries Holdings Inc, the parent company of Standard Industries, a privately held global industrial company, announced that they have entered into a definitive agreement under which Standard Industries Holdings will acquire Grace in an all-cash transaction valued at approximately $7.0 billion, including Grace’s pending pharma fine chemistry acquisition. Standard Industries’ related investment platform 40 North Management LLC (40 North) is a long-standing shareholder of Grace.

The parties expect the transaction to close in the fourth quarter of 2021.

Under the terms of the agreement, Standard Industries Holdings will acquire all of the outstanding shares of Grace common stock for $70.00 per share in cash. It was in April that 40 North had made the revised the offer of $70.00 per share.

The purchase price represents a premium of approximately 59 percent over Grace’s closing stock price of $44.05 on 6 November 2020, the last trading day prior to the announcement of 40 North’s initial proposal to acquire the company on 9 November 2020. The Grace board of directors unanimously approved the transaction.

Earlier when 40 North made an offer of $60 a share in cash to Maryland-based W R Grace, the company had rejected the offer.

“We are thrilled to welcome Grace to the Standard Industries family and look forward to working with its exceptional team to usher in a new era of innovation and growth for Grace, its employees, customers and the communities in which it operates,” said David Millstone and David Winter, co-CEOs, Standard Industries Holdings. 

“Standard’s $7 billion investment in Grace reflects their confidence in the significant growth opportunities we have and enables our shareholders to realize immediate value at a significant cash premium. This announcement is a testament to the strengths of our talented employees, industry-leading technologies, and deep global customer relationships,” said Hudson La Force, Grace’s president and chief executive officer.

The transaction is not contingent upon the receipt of financing. Financing commitments have been provided by JP Morgan, BNP Paribas, Citi and Deutsche Bank, and investment funds affiliated with Apollo Global Management as capital partner.

40 North, a holder of 14.9 percent 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.

Consistent with the terms of the merger agreement, the company will suspend payment of a dividend going forward. Upon completion of the transaction, Grace will become a privately held company and Grace’s common stock will no longer be listed on the New York Stock Exchange.

Grace will operate as a standalone company within the portfolio of Standard Industries Holdings, which includes Standard Industries’ industry leading businesses GAF, BMI Group, Schiedel, Siplast, SGI and GAF Energy.

Goldman Sachs & Co LLC and Moelis & Company LLC are serving as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Grace.

Citi and JP Morgan are serving as financial advisors and Sullivan & Cromwell LLP is serving as legal counsel to Standard Industries Holdings.

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