Canadian chemical company Canexus Corp, which rejected a hostile bid from Chemtrade Logistics Income Fund, confirmed on Tuesday that it is in talks with the company about a higher offer.
Chemtrade, a supplier of industrial chemicals, has increased its takeover offer to C$1.65 per share, Canexus said in a statement. Reuters had earlier reported the discussions.
Canexus rebuffed a C$1.50-per-share unsolicited offer in October, saying the C$297.2 million bid undervalued the company. Chemtrade initially offered C$1.45 per share. The stock closed at C$1.62 on Tuesday.
There is no assurance that the discussions will result in a deal, both companies said in separate statements.
A deal for Canexus to be acquired by Canadian chemical maker Superior Plus Corp (SPB.TO) fell through earlier this year.
Calgary-based Canexus has come under pressure from different quarters. Stirling Funds, a major shareholder, criticized Canexus for not considering the Chemtrade offer.
In September, Stirling released an open letter saying Canexus “has ostensibly not explored this interest and rather it has embarked on a convertible debenture making the company less attractive to potential suitors thereby destroying shareholder value.”
Stirling owns 14.2 percent of Canexus, according to Thomson Reuters data, and has been boosting its stake.
Further, Stirling has requisitioned a shareholder meeting, calling for the replacement of the current board with its own slate.
Murray Edwards, executive chairman of Canadian Natural Resources Ltd (CNQ.TO), also has shown interest in Canexus shares during this time.
Edwards had been increasing his stake in Canexus since the Chemtrade bid and owned about 9.5 percent of Canexus, he said in a statement in October.
Canexus had a total net debt of about C$538 million at the end of the third quarter, when it also posted a net loss.
By John Tilak
Source: Reuters
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