(By Balachander) TPC Group Inc. (NASDAQ:TPCG) said it has received a non-binding proposal to be acquired by Innospec Inc. (NASDAQ:IOSP) for $44 to $46 per share in cash, higher than a proposal made by First Reserve Corp. and SK Capital Partners.
Shares of the Houston, Texas-based TPC jumped 9.05 percent in Monday's premarket trading.
The specialty chemicals company "has determined that this proposal would reasonably be expected to lead to a superior proposal", TPC said.
Private equity firms First Reserve and SK Capital agreed to offer $40 per share for each share of TPC in August.
TPC Group is the number 1 North American producer by capacity of finished butadiene, other Crude C4 derivatives for plastics and gasoline.
The company operates in two segments, C4 Processing and Performance Products. The C4 Processing segment offers butadiene that is primarily used to produce synthetic rubber used in tires and other automotive products. The Performance Products segment provides high purity isobutylene, which is primarily used in the production of synthetic rubber, lubricant additives, surfactants, and coatings.
TPC holds the number 1 position in North American butadiene (BD), controlling a third of the market for a scarce, essential material that due to low natural gas prices has seen supply fall by 20 percent in the last five years and could see critical shortages emerge in the next couple of years.
Equity financing for the proposed acquisition will be provided by a fund, Blackstone Capital Partners VI, L.P., managed by Blackstone on behalf of its private equity investors.
TPCG stock, which has been trading in the 52-week range of $18.49 to $47.61, closed at $40.67 on Friday. IOSP ended at $34.35.