FAIRLAWN, Ohio—Ferro Corp. has rejected A. Schulman Inc.'s hostile buyout offer in a clash between two publicly traded plastics materials and specialty chemicals firms.
Fairlawn-based Schulman announced March 4 that it had offered $6.50 per share—half in cash, half in Schulman common stock—to acquire Ferro, based in nearby Mayfield Heights. The offer represents a 25 percent premium to Ferro's closing per-share price March 1. The entire deal, including debt, is valued at $855 million.
"We would welcome the opportunity to engage in a mutually beneficial dialogue with Ferro's board and management," Joseph Gingo, Schulman chairman, president and CEO, said in a news release. Ferro countered that same day with its own release, in which officials said the firm's board determined the Schulman offer "is not in the best interests of Ferro shareholders," adding that "continued execution of (Ferro's) value-creation strategy will deliver greater value to Ferro shareholders."
Ferro on March 5 reported a loss of more than $373 million for 2012, as company sales fell 18 percent to less than $1.8 billion. The loss was fueled by a sales drop of more than 50 percent in the firm's electronic materials unit, which had included solar pastes. That unit had been a growth driver for Ferro, but it had declined to the point where the business recently was sold to German industrial firm Heraeus for an undisclosed price.
Plastics-related businesses accounted for almost 30 percent of Ferro's 2012 sales, but its sales in polymer additives fell almost 5 percent, and sales in specialty plastics—including polypropylene compounds and color concentrates—fell more than 1 percent.
Performance coatings, Ferro's largest unit in 2012 with 33 percent of sales, includes production of frit, a ceramic ingredient that the firm has made since its founding in Cleveland in 1919.
Ferro's per-share stock price also has struggled. It was above $12.50 in mid-2011 but fell as low as $2.50 before rebounding. The Schulman offer had pushed Ferro's per-share stock price—which was at $5.20 on March 1—close to $7 in early trading March 8.
Several market watchers said they expect Schulman to make another, higher bid for Ferro. Increasing the bid by $1 per share would put the total value of the deal close to $950 million, sources said.