(By Balachander) Innospec Inc. (NASDAQ: IOSP) has withdrawn its proposal to acquire TPC Group Inc. (NASDAQ: TPCG) and the specialty chemicals company declared a special dividend of $2 per share.
IOSP shares added 1.71 percent in Monday early trading.
TPC received a non-binding proposal in October to be acquired by Innospec - a maker of fuel-additives - for $44 to $46 per share in cash. TPC is the number one North American producer by capacity of finished butadiene and other crude C4 derivatives for plastics and gasoline.
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Last month, TPC terminated talks with Innospec and Blackstone Group LP (BX) and stopped providing due diligence information to them related to Innospec's non-binding proposal. Houston, Texas-based TPC said it has agreed on increased consideration of $45.00 in cash per share offered by First Reserve and SK Capital, both of which agreed to offer $40 per share for each share of TPC in August.
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"We have spent a great deal of time and effort studying the TPC business, and, while we still feel that it is a good fit with Innospec, we are unable to conclude a deal structure in a manner where we are totally satisfied with the value creation for our shareholders," said Innospec CEO Patrick Williams.
"As a result, we have reluctantly decided that it would be in our investors' best interests to withdraw our proposal," Williams said on Monday.
Innospec said the special dividend will be paid on December 21, 2012, to shareholders of record at the close of business on December 14, 2012.
"Our decision to declare this dividend as a one-time exceptional dividend reflects our desire to continue to be positioned for acquisitions," Innospec said.
Meanwhile, TPC said its Board urged all stockholders to approve the merger agreement with First Reserve and SK Capital, under which stockholders will receive $45.00 per share in cash.
TPCG shares retreated 6.87 percent to trade at $44.75 on Monday.