Filed by the Registrant ☒
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Filed by a party other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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W. R. Grace & Co. common stock, par value $0.01 per share (“Grace common stock”)
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(2)
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Aggregate number of securities to which transaction applies:
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As of the close of business on July 21, 2021, the maximum number of shares of Grace common stock to which this transaction applies is estimated to be 67,492,952, which consists of: (a) 66,269,338 shares of Grace common stock outstanding; (b) 680,261 shares of Grace common stock issuable pursuant to outstanding options with an exercise price below the per share merger consideration of $70.00; (c) 273,208 shares of Grace common stock underlying restricted stock units that are not subject to performance vesting; and (d) 270,145 shares of Grace common stock underlying performance-based restricted stock units (based on achievement of applicable performance criteria at the actual level of performance (for awards issued in 2019) or target levels (in the case of awards issued in 2020 or 2021)).
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Solely for purposes of calculating the filing fee, the underlying value of the transaction was calculated based upon the sum of: (a) the product of 66,269,338 shares of Grace common stock and the per share merger consideration of $70.00; (b) the product of (i) 680,261 shares of Grace common stock issuable upon exercise of options with an exercise price below the per share merger consideration of $70.00 and (ii) the difference between $70.00 and the weighted average exercise price of such options of $61.63; (c) the product of 273,208 shares of Grace common stock underlying restricted stock units that are not subject to performance vesting and the per share merger consideration of $70.00; and (d) the product of 270,145 shares of Grace common stock underlying performance-based restricted stock units and the per share merger consideration of $70.00.
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(4)
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Proposed maximum aggregate value of transaction:
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$4,682,582,155
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(5)
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Total fee paid:
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$510,870
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In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filed fee was determined by multiplying $4,682,582,155 by 0.00010910.
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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$510,869
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(2)
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Form, Schedule or Registration Statement No.:
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Preliminary Proxy Statement on Schedule 14A and Amendment No. 1
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(3)
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Filing Party:
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W. R. Grace & Co.
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(4)
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Date Filed:
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May 24, 2021 and June 21, 2021
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Sincerely,
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Hudson La Force
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President and Chief Executive Officer
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1.
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To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of April 26, 2021 (the “Merger Agreement”), by and among Gibraltar Acquisition Holdings LLC, a Delaware limited liability company (“Parent”), Gibraltar Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Grace. Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Grace and the separate corporate existence of Merger Sub will cease, with Grace continuing as the surviving corporation (the “Merger”) and a wholly owned subsidiary of Parent;
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To consider and vote on the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Grace’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and
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To consider and vote on any proposal to adjourn the Special Meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes to approve the proposal to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).
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By Order of the Board of Directors,
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Cherée H. Johnson
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Senior Vice President, General Counsel and Secretary
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the adoption of the Merger Agreement by the requisite affirmative vote of stockholders;
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the expiration or termination of the applicable waiting period under the HSR Act and the receipt of approvals, consents, waivers or clearances under the antitrust laws of certain specified foreign jurisdictions;
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the absence of any laws or judgments issued by a governmental entity of competent jurisdiction making the Merger illegal or otherwise prohibiting the Merger;
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in the case of Parent and Merger Sub, no “Company Material Adverse Effect” having occurred since the date of the Merger Agreement (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Representations and Warranties”);
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the accuracy of the representations and warranties of Grace, Parent and Merger Sub in the Merger Agreement, generally subject to a materiality qualification, as of the date of the Merger Agreement and as of the closing of the Merger as if made as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date); and
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the performance in all material respects by Grace, Parent and Merger Sub of their respective obligations required to be performed by them under the Merger Agreement at or prior to the Effective Time.
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As a privately held company, Grace will have greater flexibility to operate with a view to the long term without focusing on short-term operating earnings and the associated implications to Grace’s unaffiliated security holders;
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By ceasing to be a public company, Grace will benefit from the elimination of the additional burdens on its management, as well as the expense associated with being a public company, including the burdens of preparing periodic reports, maintaining required controls under U.S. federal securities laws and the costs of maintaining investor relationships, staff and resources;
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The Merger will increase Standard Industries Holdings’ exposure to the specialty chemicals and specialty materials industries, which Standard Industries Holdings regards as attractive; and
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David S. Winter and David J. Millstone have significant experience in the specialty chemicals industry, including through their former roles as Director and Vice Chairmen of International Specialty Products Inc. prior to its 2011 sale to Ashland Inc., and the Purchaser Filing Persons believe that Messrs. Winter and Millstone can utilize that experience to effectively manage the Company’s business for the benefit of stakeholders.
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at the Effective Time, each Company Equity Award held by an executive officer or director will receive the treatment described in the section of this proxy statement captioned “Special Factors—Interests of Executive Officers and Directors of Grace in the Merger—Treatment of Company Equity Awards”;
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eligibility of Grace’s executive officers to receive severance payments and benefits under their change in control severance agreements with Grace and equity award vesting acceleration on certain terminations of employment under the Grace stock incentive plans, as described in more detail in the section of this proxy statement captioned “Special Factors—Interests of Executive Officers and Directors of Grace in the Merger”;
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eligibility of Grace’s executive officers to receive a retention bonus equal to 50% of the severance payment (as defined in the applicable change in control severance agreement) that would be payable under each such executive’s change in control severance agreement, subject to continued employment through the first anniversary of the closing (and in the event any such executive’s employment is terminated by Grace prior to the first anniversary of the closing, the executive would remain eligible to receive a severance payment as set forth in the executive’s change in control severance agreement); and
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continued indemnification and directors’ and officers’ liability insurance to be provided by the Surviving Corporation.
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by mutual agreement;
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the imposition of any final and non-appealable law or judgment by a governmental entity of competent jurisdiction that permanently restrains, enjoins or otherwise prohibits the consummation of the Merger;
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the other party breaches or fails to perform any of its covenants or agreements set forth in the Merger Agreement or any of the other party’s representations or warranties fails to be true and correct, which, in either case would give rise to a failure of the conditions to completion of the Merger relating to the accuracy of the other party’s representations and warranties or performance of the other party’s covenants and is not reasonably capable of being cured by the End Date (as defined below) or, if capable of being cured, is not cured within 30 calendar days following the delivery of written notice of such breach or failure;
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if the Merger has not been consummated by 5:00 p.m., New York City time, on January 26, 2022 (the “End Date”) (subject to extension to April 26, 2022 under certain circumstances, including for purposes of obtaining required regulatory approvals (as further described in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination of the Merger Agreement”)); or
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if Grace Stockholders fail to adopt the Merger Agreement at the Special Meeting (or any adjournment or postponement thereof).
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the Grace Stockholders will not be entitled to, nor will they receive, any payment for their respective shares of Grace common stock pursuant to the Merger Agreement;
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(i) Grace will remain an independent public company; (ii) Grace common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act; and (iii) Grace will continue to file periodic reports with the SEC; and
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under certain specified circumstances, Grace will be required to pay Parent a Company Termination Fee of $141 million upon the termination of the Merger Agreement. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination Fee.”
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Q:
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Why am I receiving these materials?
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The Board of Directors is furnishing this proxy statement and form of proxy card to the holders of shares of Grace common stock in connection with the solicitation of proxies to be voted at the Special Meeting.
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Q:
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When and where is the Special Meeting?
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Grace will hold the Special Meeting at [ ], on [ ], 2021, at [ ], Eastern time.
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Q:
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What am I being asked to vote on at the Special Meeting?
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You are being asked to vote on the following proposals:
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to adopt the Merger Agreement pursuant to which Merger Sub will merge with and into Grace, and Grace will become a wholly owned subsidiary of Parent;
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to approve, on an advisory (non-binding) basis, the Compensation Proposal; and
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to approve the Adjournment Proposal.
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Who is entitled to vote at the Special Meeting?
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Only holders of record of Grace common stock as of the close of business on [ ], 2021, the Record Date for the Special Meeting, are entitled to notice of the Special Meeting and to vote at the Special Meeting. Each holder of Grace common stock will be entitled to cast one (1) vote on each matter properly brought before the Special Meeting for each such share owned at the close of business on the Record Date.
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How do I attend the Special Meeting?
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If you are a stockholder of record as of the Record Date, you may attend the Special Meeting in person. If you plan to attend the Special Meeting in person, you must provide proof of ownership of Grace common stock as of the Record Date, such as an account statement indicating ownership on that date and a form of personal identification for admission to the meeting.
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How many shares are needed to constitute a quorum?
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A quorum will be present if holders of a majority of the shares of Grace common stock issued and outstanding and entitled to vote at the Special Meeting are present in person or represented by proxy at the Special Meeting. If a quorum is not present at the Special Meeting, the Special Meeting may be adjourned or postponed from time to time until a quorum is obtained.
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What will I receive if the Merger is completed?
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Upon completion of the Merger, you will be entitled to receive the Merger Consideration of $70.00 in cash, without interest and less any applicable withholding taxes, for each share of Grace common stock that you own, unless you have properly exercised and not withdrawn your appraisal rights under the DGCL. For example, if you own 100 shares of Grace common stock, you will receive $7,000 in cash in exchange for your shares of Grace common stock, without interest and less any applicable withholding taxes.
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What vote is required to adopt the Merger Agreement?
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The affirmative vote of the holders of a majority of the outstanding shares of Grace common stock entitled to vote at the Special Meeting is required to adopt the Merger Agreement. The transaction has not been structured to require the approval of a majority of unaffiliated Grace Stockholders.
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Have any Grace Stockholders already agreed to approve the proposal to adopt the Merger Agreement?
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Yes. 40 North Latitude Master, the Supporting Stockholder, which beneficially owns 9,865,008 shares of Grace common stock representing approximately 14.9% of the outstanding Grace common stock as of July 21, 2021, has entered into the Voting Agreement with the Company. Pursuant to the Voting Agreement, the Supporting Stockholder has agreed, among other things, to vote its shares of Grace common stock in favor of the proposal to adopt the Merger Agreement. For more information, see the section of this proxy statement captioned “Special Factors—The Voting Agreement.”
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What happens if the Merger is not completed?
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If the Merger Agreement is not adopted by Grace Stockholders or if the Merger is not completed for any other reason, Grace Stockholders will not receive any payment for their shares of Grace common stock. Instead, Grace will remain an independent public company, Grace common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act, and we will continue to file periodic reports with the SEC.
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Why are the stockholders being asked to cast an advisory (non-binding) vote to approve the Compensation Proposal?
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The Exchange Act and applicable SEC rules thereunder require Grace to seek an advisory (non-binding) vote with respect to certain payments that could become payable to its named executive officers in connection with the Merger.
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What vote is required to approve the Compensation Proposal?
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The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the subject matter is required for approval of the Compensation Proposal. An abstention with respect to the Compensation Proposal will have the same effect as a vote “AGAINST” this proposal. A failure to return your proxy card or otherwise vote your shares of Grace common stock (including a failure of your broker, bank or other nominee to vote shares held on your behalf) will have no effect on this proposal, assuming a quorum is present.
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What will happen if the stockholders do not approve the Compensation Proposal at the Special Meeting?
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Approval of the Compensation Proposal is not a condition to the completion of the Merger. The vote with respect to the Compensation Proposal is an advisory vote and will not be binding on Grace. Therefore, if the other requisite stockholder approvals are obtained and the Merger is completed, the amounts payable under the Compensation Proposal will continue to be payable to Grace’s named executive officers in accordance with the terms and conditions of the applicable agreements.
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What vote is required to approve the Adjournment Proposal?
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The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the subject matter is required for approval of the Adjournment Proposal. An abstention with respect to the Adjournment Proposal will have the same
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Q:
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How does the Board of Directors recommend that I vote?
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The Board of Directors, on behalf of Grace, unanimously recommends that Grace Stockholders (including unaffiliated security holders) vote:
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“FOR” the proposal to adopt the Merger Agreement;
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“FOR” the proposal to approve, on an advisory (non-binding) basis, the Compensation Proposal; and
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“FOR” the Adjournment Proposal.
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Q:
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How do the Grace directors and executive officers intend to vote?
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Grace’s directors and executive officers have informed us that they intend to vote their shares of Grace common stock in favor of the proposal to adopt the Merger Agreement and the other proposals to be considered at the Special Meeting, although they have no obligation to do so. As of the Record Date, our directors and executive officers owned and were entitled to vote, in the aggregate, approximately [ ] shares of Grace common stock, or approximately [ ]% of the outstanding shares of Grace common stock entitled to vote at the Special Meeting.
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Q:
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Am I entitled to rights of appraisal under the DGCL?
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If the Merger is completed, stockholders who do not vote in favor of the adoption of the Merger Agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL. This means that holders of shares of Grace common stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Grace common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest on the amount determined to be fair value, if any, as determined by the court. Grace Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is reproduced in Annex D to this proxy statement. See the section of this proxy statement captioned “Special Factors—Appraisal Rights.”
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Q:
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What do I need to do now?
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A:
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You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including, but not limited to, the Merger Agreement, along with all of the documents that we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card), so that your shares can be voted at the Special Meeting, unless you wish to seek appraisal. If you hold your shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares.
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Q:
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Should I send in my stock certificates or other evidence of ownership now?
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No. You should not return your stock certificates or send in other documents evidencing ownership of Grace common stock with the proxy card. If the Merger is completed, if your shares of Grace common stock are evidenced by stock certificates, the paying agent for the Merger will send you a letter of transmittal and written instructions that explain how to exchange shares of Grace common stock for the Merger Consideration (without interest and subject to required withholding taxes).
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Q:
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What happens if I sell or otherwise transfer my shares of Grace common stock after the Record Date but before the Special Meeting?
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The Record Date for the Special Meeting is earlier than the date of the Special Meeting and the date the Merger is expected to be completed. If you sell or transfer your shares of Grace common stock after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies Grace in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the Special Meeting. Even if you sell or otherwise transfer your shares of Grace common stock after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card).
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Q:
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What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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If your shares are registered directly in your name with our transfer agent, EQ Shareowner Services, you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by Grace.
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Q:
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How may I vote?
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by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope;
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by visiting the Internet at the address on your proxy card;
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by calling toll-free (within the U.S. (including its territories) and Canada) at the phone number on your proxy card; or
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by attending the Special Meeting in person.
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If my broker holds my shares in “street name,” will my broker vote my shares for me?
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No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the Special Meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instructions, your shares will not be voted on such proposals, which will have the same effect as if you voted “AGAINST” the proposal to adopt the Merger Agreement but will have no effect on the Compensation Proposal or the Adjournment Proposal.
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Q:
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May I change my vote after I have mailed my signed and dated proxy card?
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Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:
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signing another proxy card with a later date and returning it to us prior to the Special Meeting;
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submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy;
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delivering a written notice of revocation to the Corporate Secretary of Grace; or
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by attending the Special Meeting and voting in person.
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Q:
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What is a proxy?
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A:
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A proxy is your legal designation of another person to vote your shares of Grace common stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Grace common stock is called a “proxy card.”
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Q:
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If a stockholder gives a proxy, how are the shares voted?
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Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.
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Q:
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What should I do if I receive more than one (1) set of voting materials?
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Please sign, date and return (or grant your proxy electronically over the Internet or by telephone using the instructions provided in the enclosed proxy card) each proxy card and voting instruction card that you receive.
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Q:
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What is householding and how does it affect me?
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A:
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The SEC permits companies to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of common stock held through brokerage firms. If your family has multiple accounts holding common stock, you may have already received a householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.
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Q:
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Who will solicit and pay the costs of soliciting proxies?
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The Board of Directors is soliciting your proxy, and Grace will bear the costs of this solicitation. MacKenzie Partners, Inc. (“MacKenzie Partners”) has been retained to assist with the solicitation of proxies. MacKenzie Partners will be paid $[ ] and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the Special Meeting. We will reimburse brokerage firms and others for their reasonable expenses of forwarding solicitation material to beneficial owners of outstanding Grace common stock. Proxies may be solicited by mail, personal interview, e-mail, telephone or via the Internet or, without additional compensation, by certain of Grace’s directors, officers and employees.
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Q:
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Where can I find the voting results of the Special Meeting?
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A:
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Grace intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the Special Meeting. All reports that Grace files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement captioned “Where You Can Find More Information.”
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Q:
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When do you expect the Merger to be completed?
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A:
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We are working toward completing the Merger as quickly as possible and currently expect to complete the Merger in the fourth quarter of 2021. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to the closing conditions specified in the Merger Agreement, many of which are outside of our control.
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Q:
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Will the Merger be a taxable transaction?
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A:
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The Merger will be a taxable transaction for U.S. federal income tax purposes. Grace Stockholders should read the section of this proxy statement captioned “Special Factors—Material U.S. Federal Income Tax Consequences of the Merger” for a more detailed explanation of the U.S. federal income tax consequences of the Merger. Grace Stockholders should consult their tax advisors in light of their particular circumstances and any consequences arising under U.S. federal, state, local and non-U.S. income and other tax consequences relating to the Merger.
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Q:
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Who can help answer my questions?
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A:
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If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of Grace common stock, please contact our proxy solicitor:
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risks related to foreign operations, especially in areas of active conflicts and in emerging regions;
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the costs and availability of raw materials, energy, and transportation;
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the effectiveness of Grace’s research and development and growth investments;
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acquisitions and divestitures of assets and businesses;
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developments affecting Grace’s outstanding indebtedness;
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developments affecting Grace’s pension obligations;
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legacy matters (including product, environmental, and other legacy liabilities) relating to past activities of Grace;
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its legal and environmental proceedings;
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environmental compliance costs (including existing and potential laws and regulations pertaining to climate change);
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the inability to establish or maintain certain business relationships;
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the inability to hire or retain key personnel;
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natural disasters such as storms and floods;
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fires and force majeure events;
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the economics of our customers’ industries, including the petroleum refining, petrochemicals, and plastics industries, and shifting consumer preferences;
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|
public health and safety concerns, including pandemics and quarantines;
|
•
|
changes in tax laws and regulations;
|
•
|
international trade disputes, tariffs, and sanctions;
|
•
|
the potential effects of cyberattacks;
|
•
|
the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
|
•
|
the failure to obtain Grace stockholder approval of the transaction or the failure to satisfy any of the other conditions to the completion of the Merger;
|
•
|
risks relating to the financing required to complete the Merger;
|
•
|
the effect of the announcement of the Merger on the ability of Grace to retain and hire key personnel and maintain relationships with its customers, vendors and others with whom it does business, or on its operating results and businesses generally;
|
•
|
the effects of the transaction on the integration of the Fine Chemistry Services business acquired by Grace from Albemarle Corporation for approximately $570 million, which was announced by Grace on February 26, 2021 and consummated on June 1, 2021 (the “FCS Acquisition”);
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•
|
risks associated with the disruption of management’s attention from ongoing business operations due to the transaction;
|
•
|
the ability to meet expectations regarding the timing and completion of the Merger;
|
•
|
significant transaction costs, fees, expenses and charges;
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•
|
the risk of litigation and/or regulatory actions related to the Merger;
|
•
|
other business effects, including the effects of industry, market, economic, political, regulatory or world health conditions (including new or ongoing effects of the COVID-19 pandemic), and other factors detailed in Grace’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2020 and Grace’s other filings with the SEC, which are available at www.sec.gov and on Grace’s website at www.grace.com.
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•
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approve the adoption of the Merger Agreement, which is further described in the sections of this proxy statement captioned “Special Factors” and “Proposal 1: Adoption of the Merger Agreement”;
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•
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approve, on an advisory (non-binding) basis, certain compensation that may be paid or become payable to Grace’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement, the value of which is disclosed in the table in the section of this proxy statement captioned “Special Factors—Interests of Executive Officers and Directors of Grace in the Merger”; and
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•
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adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.
|
•
|
signing another proxy card with a later date and returning it to us prior to the Special Meeting;
|
•
|
submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy;
|
•
|
delivering a written notice of revocation to the Corporate Secretary of Grace; or
|
•
|
attending the Special Meeting and voting in person.
|
•
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the Grace Stockholders will not be entitled to, nor will they receive, any payment for their respective shares of Grace common stock pursuant to the Merger Agreement;
|
•
|
(i) Grace will remain an independent public company; (ii) Grace common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act; and (iii) Grace will continue to file periodic reports with the SEC;
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•
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we anticipate that (i) management will operate the business in a manner similar to that in which it is being operated today and (ii) stockholders will be subject to similar types of risks and uncertainties as those to which they are currently subject, including, but not limited to, risks and uncertainties with respect to Grace’s business, prospects and results of operations, as such may be affected by, among other things, the highly competitive industry in which Grace operates and economic conditions;
|
•
|
the price of Grace common stock may decline significantly, and if that were to occur, it is uncertain when, if ever, the price of Grace common stock would return to the price at which it trades as of the date of this proxy statement;
|
•
|
the Board of Directors will continue to evaluate and review Grace’s business operations, strategic direction and capitalization, among other things, and will make such changes as are deemed appropriate; irrespective of these efforts, it is possible that no other transaction acceptable to the Board of Directors will be offered or that Grace’s business, prospects and results of operations will be adversely impacted; and
|
•
|
under specified circumstances, Grace will be required to pay Parent the Company Termination Fee of $141 million upon the termination of the Merger Agreement, as described in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Termination Fee.”
|
•
|
the current and historical market prices of Grace common stock, including the market performance of the Grace common stock relative to those of other participants in Grace’s industry and general market
|
•
|
the belief of the Board of Directors, based upon the course and history of negotiations with 40 North and Standard Industries Holdings (as described in more detail under the section of this proxy statement captioned “—Background of the Merger”), that the Merger Consideration represents the highest price that Parent was willing to pay and that the terms of the Merger Agreement include the most favorable terms to the Company, in the aggregate, to which Parent was willing to agree;
|
•
|
the Board of Directors’ consideration of the strategic alternatives reasonably available to Grace, including the results of the strategic review process undertaken by Grace with the assistance of its financial advisors described in the section of this proxy statement captioned “—Background of the Merger”;
|
•
|
the fact that, during the course of such strategic review process, other than Counterparty C, no strategic parties or financial sponsors made a proposal to Grace with respect to a strategic business combination or sale transaction;
|
•
|
the fact that, despite the fact that it had been widely and publicly known for months that Grace was conducting a strategic review process and was engaged in discussions with 40 North (as described in more detail under the section of this proxy statement captioned “—Background of the Merger”), there had been no indications of interest from other potential counterparties (other than 40 North and Counterparty C) to a strategic business combination or sale transaction;
|
•
|
the fact that, as described in the section of this proxy statement captioned “—Background of the Merger,” Counterparty C would not agree to mutual due diligence without an agreement in principle on a relative valuation that did not compare favorably other strategic alternatives reasonably available to the Company;
|
•
|
the fact that, despite an invitation to Counterparty C from representatives of the Company to re-engage in discussions following 40 North’s best and final April 1 Proposal, Counterparty C did not express any interest in re-engaging in discussions or submitting a proposal that might be competitive with 40 North’s April 1 Proposal (as described in more detail under the section of this proxy statement captioned “—Background of the Merger”);
|
•
|
the high degree of certainty that the closing would be achieved in a timely manner, in view of the terms of the Merger Agreement;
|
•
|
the view of the Board of Directors that the Merger Consideration was more favorable to Grace Stockholders on a risk-adjusted basis than the potential value that might result from other alternatives reasonably available to Grace, based upon the Board of Directors’ extensive knowledge of Grace’s business, assets, financial condition and results of operations, its competitive position and historical and projected financial performance, and the belief that the Merger Consideration represented an attractive and comparatively certain value for Grace Stockholders relative to the risk-adjusted prospects for Grace on a standalone basis;
|
•
|
the fact that the Supporting Stockholder, the Company’s most significant stockholder and a long-term investor in the Company, was prepared to execute and deliver the Voting Agreement;
|
•
|
the financial analysis presentation of Goldman Sachs, and the oral opinion of Goldman Sachs, subsequently confirmed by delivery of a written opinion, dated April 26, 2021, to the Board of Directors to the effect that, as of such date and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of Grace common stock in the Merger was fair, from a financial point of view, to such holders, as more fully described below under the section of this proxy statement captioned “—Opinion of Goldman Sachs & Co. LLC,” the full text of which written opinion is attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement in its entirety;
|
•
|
the financial analysis presentation of Moelis, and the oral opinion of Moelis, subsequently confirmed by delivery of a written opinion, dated April 26, 2021, to the Board of Directors to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken set forth therein, the Merger Consideration to be received by the holders of shares of Grace common stock (other than the Supporting Stockholder, Parent, Merger Sub, any other subsidiary of Parent, the Company or any other wholly owned subsidiary of the Company) in the Merger was fair from a financial point of view to such holders, as more fully described below under the section of this proxy statement captioned “—Opinion of Moelis & Company LLC,” the full text of which written opinion is attached as Annex C to this proxy statement and is incorporated by reference in this proxy statement in its entirety;
|
•
|
the terms and conditions of the Merger Agreement and the other transaction documents, including the following:
|
•
|
Grace’s ability to terminate the Merger Agreement in order to accept a Superior Company Proposal, subject to certain conditions of the Merger Agreement and paying Parent the Company Termination Fee of $141 million – an amount which the Board of Directors believed, based upon the advice of its financial and legal advisors, was unlikely to deter third parties from making Company Takeover Proposals;
|
•
|
the conditions to closing contained in the Merger Agreement, which are limited in number and scope, and which, in the case of the condition related to the accuracy of Grace’s representations and warranties, is generally subject to a Company Material Adverse Effect (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Representations and Warranties”) qualification;
|
•
|
the requirement that the Merger Agreement be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Grace common stock entitled to vote at the Special Meeting;
|
•
|
the fact that Grace has sufficient operating flexibility to conduct its business in the ordinary course prior to the consummation of the Merger;
|
•
|
the provision of the Merger Agreement allowing the Board of Directors to effect a Company Adverse Recommendation Change and to terminate the Merger Agreement, in certain circumstances relating to the presence of a Superior Company Proposal (or to effect a change of recommendation in response to an intervening event) subject to the applicable procedures, terms and conditions set forth in the Merger Agreement (including, if applicable, payment of termination fees) (for more information, see the sections of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Company Board Recommendation; Company Adverse Recommendation Change,” “Proposal 1: Adoption of the Merger Agreement—Termination of the Merger Agreement” and “Proposal 1: Adoption of the Merger Agreement—Termination Fee”);
|
•
|
the absence of a financing condition in the Merger Agreement;
|
•
|
the limited overlaps between the businesses of Grace and Parent relative to those that could be present in transactions with certain other industry participants;
|
•
|
the end date of January 26, 2022 (subject to extension to April 26, 2022 under certain circumstances, including for purposes of obtaining required regulatory approvals) allowing for sufficient time to complete the Merger;
|
•
|
that Parent has obtained committed debt financing for the transaction from reputable financial institutions and committed equity financing for the transaction from Standard Industries Holdings, an affiliated entity of Parent, that together provide funding of an amount sufficient to cover the aggregate Merger Consideration, all fees and expenses payable by Parent, Merger Sub or Grace and the repayment or refinancing of certain indebtedness required to be repaid or refinanced;
|
•
|
that Parent has announced that the equity commitment from Standard Industries Holdings will be supported by (i) the available cash of Standard Industries Holdings’ subsidiary, Standard Industries and (ii) up to $2,500 million in proceeds from a secured term loan;
|
•
|
the obligation of Parent and Merger Sub to use reasonable best efforts to consummate the financing and the limited number and nature of the conditions to the debt and equity financing;
|
•
|
the Company’s ability, under circumstances specified in the Merger Agreement, to specifically enforce the obligations of Parent and Merger to consummate the Merger; and
|
•
|
the requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent will pay the Company the Parent Termination Fee of $281 million, and the obligation to pay such amount by Standard Industries Holdings, pursuant to the terms of a limited guaranty, as more fully described under the section of this proxy statement captioned “—Financing of the Merger—Equity Financing” and “—Financing of the Merger—Guaranty.”
|
•
|
the availability of appraisal rights under Delaware law to holders of shares of Grace common stock who do not vote in favor of the adoption of the Merger Agreement and comply with all of the required procedures under Delaware law, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than, or the same as the amount such stockholders would have received under the Merger Agreement; and
|
•
|
the fact that, in the absence of the Merger, Grace would continue to incur significant expenses by remaining a public company, including legal, accounting, transfer agent, printing and filing fees, and that those expenses could adversely affect Grace’s financial performance and the value of its shares.
|
•
|
Ms. Reiland resigned from the Board of Directors on October 13, 2020, and since that time no employee or person affiliated with the Purchaser Filing Persons has been a member of the Board of Directors and none of the Purchaser Filing Persons participated in or had any influence on the deliberative process of, or the conclusions reached by, the Board of Directors;
|
•
|
the directors of Grace are not officers or employees of Grace (other than Mr. La Force), are not representatives of the Purchaser Filing Persons, and are not expected to have an economic interest in Grace or the Surviving Corporation following the completion of the Merger;
|
•
|
the Board of Directors received the advice and assistance of experienced legal and financial advisors;
|
•
|
at the direction of the Board of Directors, with the assistance of Grace’s legal and financial advisors, Grace and the Purchaser Filing Persons engaged in extensive arm’s length negotiations regarding the Merger Consideration that resulted in an increase in the Merger Consideration during the course of negotiations, and the improvement, from the perspective of Grace, of other terms of the Merger and the Merger Agreement, including the operating covenants and the amount of the termination fees, relative to the initial terms proposed by the Purchaser Filing Persons;
|
•
|
40 North will receive the same cash consideration as Grace’s other stockholders and the Merger Agreement does not provide for 40 North to “roll over” its shares or receive differential consideration in the Merger;
|
•
|
the Board of Directors met at least ten times during the course of approximately six months to review potential transactions including the proposal from and negotiations with 40 North, the proposal from Counterparty C and interest from other parties as well as other strategic options (including the standalone business plan) potentially available to Grace;
|
•
|
after the entry into the 2021 Confidentiality Agreement, the parties engaged in a robust and intensive nearly three-month-long, arm’s-length negotiation and diligence process;
|
•
|
the 2021 Confidentiality Agreement required 40 North and its affiliates, among other things, to comply with certain standstill restrictions until March 31, 2021, subject to the earlier termination of such restrictions in certain circumstances and, as such, prior to the entry into the Merger Agreement,
|
•
|
the Purchaser Filing Persons do not have any relationship with management of Grace which would provide the Purchaser Filing Persons with a say over the operations or management of Grace or would influence the Board of Directors’ decision to approve the Merger Agreement;
|
•
|
none of the members of management of Grace have discussed, negotiated or entered into any agreement or understanding with the Purchaser Filing Persons with respect to any rollover of their equity interests in Grace, representation on the Surviving Corporation’s board post-closing or the terms of any post-closing employment;
|
•
|
the equity awards held by management as of immediately prior to the closing of the Merger will generally convert into the same cash Merger Consideration that public stockholders will receive, subject to the specific terms and conditions described in this proxy statement;
|
•
|
given the size of 40 North’s ownership interest in Grace, the Supporting Stockholder’s vote in favor of the transaction, without the support of a large number of other stockholders of Grace, would not be sufficient to approve the Merger as a matter of Delaware law; and
|
•
|
the provision of the Merger Agreement allowing the Board of Directors to effect a Company Adverse Recommendation Change and to terminate the Merger Agreement, in certain circumstances relating to the presence of a Superior Company Proposal (or to effect a change of recommendation in response to an intervening event) subject to the applicable procedures, terms and conditions set forth in the Merger Agreement (including, if applicable, payment of a reasonable termination fee) (for more information, see the sections of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Company Board Recommendation; Company Adverse Recommendation Change,” “Proposal 1: Adoption of the Merger Agreement—Termination of the Merger Agreement” and “Proposal 1: Adoption of the Merger Agreement—Termination Fee”).
|
•
|
the fact that Grace would no longer exist as an independent, publicly traded company, and stockholders would no longer participate in any future earnings or growth and would not benefit from any potential future appreciation in value of Grace;
|
•
|
the risks and costs to Grace if the Merger is not completed in a timely manner or at all, including the potential adverse effect on Grace’s ability to attract and retain key personnel, the diversion of management resources and the potential disruptive effect on Grace’s day-to-day operations and Grace’s relationships with employees, customers, suppliers, partners and other third parties, any or all of which risks and costs, among other things, could adversely affect Grace’s overall competitive position and the trading price of its common stock;
|
•
|
the requirement under certain circumstances that Grace pay Parent a termination fee following termination of the Merger Agreement, including if the Merger Agreement is terminated by Grace in order to enter into a Superior Company Proposal or by Parent because the Board of Directors effects a Company Adverse Recommendation Change;
|
•
|
the fact that, under the terms of the Merger Agreement, if Parent fails to complete the Merger as a result of failure to obtain the Debt Financing (as defined in the section of this proxy statement captioned “Special Factors—Financing of the Merger”), the Company’s remedies will be limited to the termination fee payable by Parent described above, which may be inadequate to compensate Grace for the damage caused;
|
•
|
the restrictions on the conduct of Grace’s business prior to the consummation of the Merger, which may delay or prevent Grace from undertaking business opportunities that may arise before the completion of the Merger and that, absent the Merger Agreement, Grace might have pursued;
|
•
|
the fact that an all cash transaction would be taxable to Grace’s stockholders that are U.S. persons for U.S. federal income tax purposes;
|
•
|
the fact that under the terms of the Merger Agreement, subject to certain exceptions, Grace is unable to solicit other Company Takeover Proposals;
|
•
|
the significant costs involved in connection with entering into the Merger Agreement and completing the Merger (many of which are payable whether or not the Merger is consummated) and the substantial time and effort of Grace management required to complete the Merger, which may disrupt its business operations and have a negative effect on its financial results;
|
•
|
the risk that 40 North’s ownership interest in Grace would be taken into account by third parties considering whether to make alternative proposals;
|
•
|
the risk that the Merger might not be completed and the effect of the resulting public announcement of termination of the Merger Agreement on the trading price of Grace common stock;
|
•
|
the fact that the completion of the Merger requires certain regulatory clearances and consents, which clearances and consents could subject the Merger to unforeseen delays and risks;
|
•
|
the fact that Parent and Merger Sub are newly formed entities with essentially no assets, and the Guaranty, provided by Standard Industries Holdings, guarantees Parent’s obligations under the Merger Agreement only with respect to payment of the Parent Termination Fee and certain reimbursement obligations and is subject to a cap of $290 million;
|
•
|
the fact that Grace’s directors and officers may have interests in the Merger that may be different from, or in addition to, those of Grace’s stockholders generally (see below under the caption “—Interests of Executive Officers and Directors of Grace in the Merger”); and
|
•
|
the possible loss of key management or other personnel of Grace during the pendency of the Merger.
|
•
|
the Merger Consideration represents a premium of approximately 59% over Grace’s closing stock price of $44.05 on November 6, 2020, the last trading day prior to the announcement of 40 North’s initial proposal to acquire Grace on November 9, 2020;
|
•
|
the Merger Consideration consists entirely of cash, which provides a degree of certainty of value and liquidity to Grace’s unaffiliated security holders;
|
•
|
the Merger Consideration consists entirely of cash, therefore Grace’s unaffiliated security holders that are subject to U.S. federal income taxation generally should be able to have cash on hand with which to pay all or a portion of their U.S. federal income taxes in connection with the sale of their common shares of Grace;
|
•
|
Grace’s unaffiliated security holders will not be exposed to risks and uncertainties relating to the prospects of Grace following completion of the Merger;
|
•
|
notwithstanding that the respective opinions of Goldman Sachs and Moelis were provided solely to the Board of Directors in connection with its evaluation of the Merger and are not recommendations as to any action the Board of Directors or any Grace Stockholder may take and that the Purchaser Filing Persons are not entitled to, nor did they, rely on such opinions, the fact that the Board of Directors received:
|
•
|
an opinion of Goldman Sachs, dated as of April 26, 2021, that, as of April 26, 2021 and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of Grace common stock pursuant to the Merger Agreement was fair from a financial point of view to such holders; and
|
•
|
an opinion of Moelis, dated April 26, 2021, that, as of April 26, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken, the Merger Consideration to be received in the Merger by the holders of the Grace common stock (other than the Supporting Stockholder, Parent, Merger Sub, any other subsidiary of Parent, Grace or any wholly owned subsidiary of Grace) was fair, from a financial point of view, to such holders;
|
•
|
the financial and other terms and conditions of the Merger Agreement were the product of extensive arm’s-length negotiations;
|
•
|
the Merger and Merger Agreement were unanimously approved by the Board of Directors, and the Board of Directors unanimously determined that entry into the Merger Agreement was in the best interests of Grace and its stockholders;
|
•
|
Ms. Reiland resigned from the Board of Directors on October 13, 2020, and since that time no employee or person affiliated with the Purchaser Filing Persons has been a member of the Board of Directors and none of the Purchaser Filing Persons participated in or had any influence on the deliberative process of, or the conclusions reached by, the Board of Directors; and
|
•
|
the Merger is conditioned on approval by Grace Stockholders representing a majority of outstanding shares of Grace common stock entitled to vote at the Special Meeting.
|
•
|
the Merger Agreement;
|
•
|
annual reports to Grace Stockholders and Annual Reports on Form 10-K of Grace for the five fiscal years ended December 31, 2020;
|
•
|
certain interim reports to Grace Stockholders and Quarterly Reports on Form 10-Q of Grace;
|
•
|
certain other communications from Grace to the Grace Stockholders;
|
•
|
certain publicly available research analyst reports for Grace; and
|
•
|
certain internal financial analyses and forecasts for Grace prepared by its management, as approved for Goldman Sachs’ use by Grace (as described in the section of this proxy statement captioned “—Management Projections”).
|
•
|
the closing price per share of Grace common stock on April 23, 2021;
|
•
|
the closing price per share of Grace common stock on March 31, 2021, the last trading day before the public announcement of the proposal by 40 North to acquire Grace at $70.00 in cash per share of Grace common stock;
|
•
|
the volume weighted average price per share (“VWAP”) of Grace common stock over the 20-day trading period ended March 31, 2021;
|
•
|
the VWAP of Grace common stock over the 30-day trading period ended March 31, 2021;
|
•
|
the VWAP of Grace common stock after November 6, 2020, the last trading day before the first public announcement of a proposal by 40 North to acquire Grace, through April 23, 2021;
|
•
|
the closing price per share of Grace common stock on November 6, 2020;
|
•
|
the highest closing price per share of Grace common stock during the 52-week period ended April 23, 2021; and
|
•
|
the highest closing price per share of Grace common stock during the 52-week period ended November 6, 2020.
|
•
|
Umicore;
|
•
|
Clariant;
|
•
|
Johnson Matthey;
|
•
|
PQ Group;
|
•
|
PPG;
|
•
|
Ashland;
|
•
|
Avient; and
|
•
|
NewMarket
|
•
|
a premium of 9.0% based on the closing price per share of the Grace common stock on April 23, 2021 of $64.24;
|
•
|
a premium of 16.9% based on the closing price per share of the Grace common stock on March 31, 2021 of $59.86;
|
•
|
a premium of 17.3% based on the VWAP of the Grace common stock over the 20-day trading period ended March 31, 2021 of $59.69;
|
•
|
a premium of 17.0% based on the VWAP of the Grace common stock over the 30-day trading period ended March 31, 2021 of $59.82;
|
•
|
a premium of 19.2% based on the VWAP of the Grace common stock after November 6, 2020 through April 23, 2021 of $58.71;
|
•
|
a premium of 58.9% based on the closing price per share on November 6, 2020 of $44.05;
|
•
|
a premium of 7.4% based on the highest closing price per share of Grace common stock during the 52-week period ended April 23, 2021 of $65.17;
|
•
|
a discount of 4.6% based on the highest closing price per share of Grace common stock during the 52-week period ended November 6, 2020 of $73.36;
|
•
|
a premium of 19.1% based on the hypothetical undisturbed stock price from November 6, 2020 of $58.77; and
|
•
|
a premium of 31.6% based on the hypothetical undisturbed stock price from October 13, 2020 of $53.21.
|
|
Date
|
| |
Acquirer
|
| |
Target
|
|
|
March 2021
|
| |
Cerberus / Koch
|
| |
PQ’s Performance Chemicals Business
|
|
|
February 2021
|
| |
Grace
|
| |
Albemarle’s Fine Chemistry Services Business
|
|
|
February 2021
|
| |
Bain Capital / Cinven
|
| |
Lonza Specialty Ingredients
|
|
|
October 2020
|
| |
Ardian
|
| |
Angus Chemical Company
|
|
|
December 2019
|
| |
Lone Star
|
| |
BASF Construction Chemicals
|
|
|
December 2019
|
| |
Avient
|
| |
Clariant Masterbatches
|
|
|
April 2019
|
| |
Merck
|
| |
Versum
|
|
|
April 2019
|
| |
Parker-Hannifin
|
| |
LORD
|
|
|
April 2019
|
| |
Nippon
|
| |
Dulux
|
|
|
January 2019
|
| |
Sika
|
| |
Parex
|
|
|
August 2018
|
| |
Cabot Microelectronics
|
| |
KMG Chemicals
|
|
|
July 2018
|
| |
Messer / CVC
|
| |
Linde North America
|
|
|
March 2018
|
| |
Carlyle
|
| |
Specialty Chemicals Business of Akzo Nobel
|
|
|
December 2017
|
| |
Grace
|
| |
Albemarle Polyolefin Catalysts
|
|
|
Date
|
| |
Acquirer
|
| |
Target
|
|
|
September 2017
|
| |
Kuraray
|
| |
Calgon Carbon
|
|
|
September 2017
|
| |
H.B. Fuller
|
| |
Royal Adhesives
|
|
|
April 2017
|
| |
Houghton
|
| |
Quaker
|
|
|
March 2017
|
| |
Henkel
|
| |
Darex
|
|
|
October 2016
|
| |
Carlyle
|
| |
Atotech
|
|
|
June 2016
|
| |
BASF
|
| |
Chemetall
|
|
|
May 2016
|
| |
Evonik
|
| |
Air Products Performance Materials
|
|
|
March 2016
|
| |
Sherwin-Williams
|
| |
Valspar Corp
|
|
|
November 2015
|
| |
Air Liquide SA
|
| |
Airgas
|
|
|
July 2015
|
| |
Platform Specialty
|
| |
Alent plc
|
|
|
July 2015
|
| |
Solvay
|
| |
Cytec Industries
|
|
|
June 2015
|
| |
Apollo Global Management, LLC
|
| |
OM Group, Inc.
|
|
|
February 2015
|
| |
Tronox Limited
|
| |
FMC Corp’s Alkali Chemicals Business
|
|
|
| |
Selected Transactions
|
| |
Proposed
Transaction
|
||||||
|
| |
Range
|
| |
Median
|
| |
Mean
|
| ||
EV / LTM EBITDA
|
| |
9.2x – 16.5x
|
| |
13.1x
|
| |
13.0x
|
| |
14.0x
|
•
|
reviewed certain publicly available business and financial information relating to Grace;
|
•
|
reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Grace furnished to Moelis by Grace, including financial forecasts provided to or discussed with Moelis by the management of Grace (as described in the section of this proxy statement captioned “—Management Projections”);
|
•
|
reviewed information relating to the capitalization (including incentive equity) of Grace furnished to Moelis by Grace;
|
•
|
conducted discussions with members of the senior management and representatives of Grace concerning the information described in the foregoing three items in this paragraph, as well as the business and prospects of Grace generally;
|
•
|
reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;
|
•
|
reviewed the financial terms of certain other transactions that Moelis deemed relevant;
|
•
|
reviewed an execution version of each of (i) the Merger Agreement, (ii) the Debt Commitment Letter, (iii) the Equity Commitment Letter, (iv) the Guaranty, (v) the Voting Agreement and (vi) the debt commitment letter among JPMorgan Chase Bank, N.A., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Standard Industries;
|
•
|
participated in certain discussions and negotiations among representatives of Grace and Parent and their advisors; and
|
•
|
conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.
|
•
|
Adjusted EBITDA: generally calculated as the relevant company’s earnings before interest, taxes, depreciation and amortization, as adjusted to exclude one-time charges and benefits and to reflect the full-year impact of material corporate transactions.
|
•
|
Enterprise Value (or EV): which (i) with respect to Grace, was calculated as the market value of Grace’s fully diluted common equity based on its closing stock prices on April 23, 2021 and March 31, 2021 (which Moelis deemed to be the unaffected trading date for purposes of its analyses) and share count information as of April 22, 2021 provided by Grace management and approved by Grace management for use by Moelis in rendering its opinion, plus (a) preferred stock, plus (b) debt, less (c) cash and cash equivalents, less (d) unconsolidated assets and plus (e) book value of non-controlling interests (in each of the foregoing clauses (a) through (e), as projected by Grace management as of
|
|
| |
Market Cap
($ in
millions)
|
| |
EV
($ in
millions)
|
| |
EV / Adj.
EBITDA
2021E
|
| |
EV / Adj.
EBITDA
2022E
|
Specialty Chemical Companies
|
| |
|
| |
|
| |
|
| |
|
Air Products & Chemicals, Inc.
|
| |
$64,687
|
| |
$66,883
|
| |
16.5x
|
| |
14.9x
|
Albemarle Corporation
|
| |
$18,947
|
| |
$20,673
|
| |
24.8x
|
| |
19.3x
|
Ashland Global Holdings Inc.
|
| |
$5,718
|
| |
$7,898
|
| |
12.9x
|
| |
11.8x
|
Celanese Corporation
|
| |
$18,091
|
| |
$20,695
|
| |
10.8x
|
| |
10.5x
|
DuPont de Nemours, Inc.
|
| |
$41,641
|
| |
$55,670
|
| |
14.2x
|
| |
13.3x
|
Element Solutions Inc.
|
| |
$5,145
|
| |
$6,367
|
| |
13.9x
|
| |
13.0x
|
Hexcel Corporation
|
| |
$4,848
|
| |
$5,678
|
| |
28.8x
|
| |
17.3x
|
Mean
|
| |
|
| |
|
| |
17.4x
|
| |
14.3x
|
Median
|
| |
|
| |
|
| |
14.2x
|
| |
13.3x
|
Catalyst Companies (For Reference Only)
|
| |
|
| |
|
| |
|
| |
|
Albemarle Corporation
|
| |
$18,947
|
| |
$20,673
|
| |
24.8x
|
| |
19.3x
|
Umicore SA
|
| |
$14,579
|
| |
$16,363
|
| |
13.7x
|
| |
13.1x
|
Johnson Matthey Plc.
|
| |
$8,796
|
| |
$9,967
|
| |
9.7x
|
| |
8.9x
|
Clariant AG
|
| |
$7,318
|
| |
$8,377
|
| |
11.6x
|
| |
10.6x
|
PQ Group Holdings Inc.
|
| |
$2,343
|
| |
$2,712
|
| |
12.1x
|
| |
10.6x
|
Mean
|
| |
|
| |
|
| |
14.4x
|
| |
12.5x
|
Median
|
| |
|
| |
|
| |
12.1x
|
| |
10.6x
|
|
| |
|
| |
|
| |
|
| |
|
Grace Consensus (Current – as of 04/23/21)
|
| |
$4,299
|
| |
$5,987
|
| |
11.3x
|
| |
10.1x
|
Grace Consensus (Unaffected – as of 03/31/21)
|
| |
$4,002
|
| |
$5,689
|
| |
10.7x
|
| |
9.7x
|
Grace Management Projections (Current – as of 04/23/21)
|
| |
$4,299
|
| |
$6,572
|
| |
11.4x
|
| |
9.4x
|
Grace Management Projections (Unaffected – as of 03/31/21)
|
| |
$4,002
|
| |
$6,274
|
| |
10.9x
|
| |
8.9x
|
Date Announced
|
| |
Acquiror
|
| |
Target
|
| |
EV (in
millions)
|
| |
EV / LTM
Adj.
EBITDA
|
March 2021
|
| |
DuPont De Nemours, Inc.
|
| |
Laird PLC
|
| |
$2,300
|
| |
16.5x
|
March 2021
|
| |
Cerberus Capital Management, L.P. and Koch Minerals & Trading, LLC
|
| |
PQ Group Holdings Inc.’s Performance Chemicals business
|
| |
$1,100
|
| |
9.4x
|
February 2021
|
| |
Bain Capital Private Equity & Cinven Group Ltd.
|
| |
Lonza Specialty Ingredients
|
| |
$4,671
|
| |
13.0x
|
October 2020
|
| |
Ardian SA and Ardian Holding SAS
|
| |
Angus Chemical Company
|
| |
$2,250
|
| |
13.1x
|
April 2019
|
| |
Merck KGaA
|
| |
Versum Materials, Inc.
|
| |
$6,499
|
| |
14.3x
|
August 2018
|
| |
Cabot Microelectronics Corporation
|
| |
KMG Chemicals, Inc.
|
| |
$1,566
|
| |
13.2x
|
March 2018
|
| |
Carlyle Group Inc. & GIC Pte.
|
| |
Akzo Nobel N.V.’s Specialty Chemicals business
|
| |
$12,524
|
| |
9.8x
|
December 2017
|
| |
W. R. Grace & Co.
|
| |
Albemarle Corporation’s Polyolefin Catalysts business
|
| |
$416
|
| |
12.8x
|
September 2017
|
| |
Kuraray Co., Ltd.
|
| |
Calgon Carbon Corporation
|
| |
$1,329
|
| |
15.6x
|
Date Announced
|
| |
Acquiror
|
| |
Target
|
| |
EV (in
millions)
|
| |
EV / LTM
Adj.
EBITDA
|
September 2017
|
| |
H.B. Fuller Company
|
| |
Royal Adhesives & Sealants LLC
|
| |
$1,575
|
| |
11.4x
|
December 2016
|
| |
Evonik Industries AG
|
| |
J.M. Huber Corporation’s Silica business
|
| |
$630
|
| |
10.5x
|
October 2016
|
| |
Carlyle Group Inc.
|
| |
Atotech B.V.
|
| |
$3,200
|
| |
11.9x
|
September 2016
|
| |
Lanxess AG
|
| |
Chemtura Corporation
|
| |
$2,563
|
| |
9.5x
|
June 2016
|
| |
BASF SE
|
| |
Albemarle Corporation’s Chemetall Surface Treatment business
|
| |
$3,200
|
| |
15.3x
|
May 2016
|
| |
Evonik Industries AG
|
| |
Air Products & Chemicals, Inc.’s Performance Materials division
|
| |
$3,800
|
| |
15.8x
|
November 2015
|
| |
Air Liquide S.A.
|
| |
Airgas
|
| |
$13,400
|
| |
13.7x
|
July 2015
|
| |
Solvay S.A.
|
| |
Cytec Industries Incorporated.
|
| |
$6,153
|
| |
14.8x
|
July 2015
|
| |
Platform Specialty Products Corporation
|
| |
Alent plc
|
| |
$2,254
|
| |
13.1x
|
June 2015
|
| |
Apollo Affiliated Funds
|
| |
OM Group, Inc.
|
| |
$1,100
|
| |
11.4x
|
November 2014
|
| |
Golden Gate Capital
|
| |
Angus Chemical Company
|
| |
$1,200
|
| |
11.2x
|
September 2014
|
| |
Eastman Chemical Company
|
| |
Taminco Corporation
|
| |
$2,706
|
| |
10.0x
|
July 2014
|
| |
Albemarle Corporation
|
| |
Rockwood Chemical Co.
|
| |
$6,142
|
| |
11.3x
|
October 2013
|
| |
W. R. Grace & Co.
|
| |
Dow Chemical Company’s Catalysts business
|
| |
$500
|
| |
11.1x
|
October 2013
|
| |
Platform Specialty Products Corporation
|
| |
MacDermid
|
| |
$1,800
|
| |
10.2x
|
October 2013
|
| |
Solvay S.A.
|
| |
Chemlogics Group
|
| |
$1,345
|
| |
10.8x
|
June 2013
|
| |
Cinven Group Ltd.
|
| |
CeramTec
|
| |
$1,988
|
| |
11.3x
|
Mean
|
| |
|
| |
|
| |
|
| |
12.4x
|
Median
|
| |
|
| |
|
| |
|
| |
11.7x
|
•
|
Merger Sub;
|
•
|
Parent;
|
•
|
Midco Holdings, the parent company of Parent;
|
•
|
Parent Holdings, the parent company of Midco Holdings;
|
•
|
Standard Industries;
|
•
|
Standard Industries Holdings, the parent company of both Parent Holdings and Standard Industries;
|
•
|
40 North;
|
•
|
40 North Latitude Feeder;
|
•
|
40 North GP III;
|
•
|
the Supporting Stockholder;
|
•
|
David Winter, the Co-Chief Executive Officer of Standard Industries Holdings and Co-Principal of 40 North; and
|
•
|
David Millstone, the Co-Chief Executive Officer of Standard Industries Holdings and Co-Principal of 40 North.
|
•
|
As a privately held company, Grace will have greater flexibility to operate with a view to the long term without focusing on short-term operating earnings and the associated implications to Grace’s unaffiliated security holders;
|
•
|
By ceasing to be a public company, Grace will benefit from the elimination of the additional burdens on its management, as well as the expense associated with being a public company, including the burdens of preparing periodic reports, maintaining required controls under U.S. federal securities laws and the costs of maintaining investor relationships, staff and resources;
|
•
|
The Merger will increase Standard Industries Holdings’ exposure to the specialty chemicals and specialty materials industries, which Standard Industries Holdings regards as attractive; and
|
•
|
David S. Winter and David J. Millstone have significant experience in the specialty chemicals industry, including through their former roles as Director and Vice Chairmen of International Specialty Products Inc. prior to its 2011 sale to Ashland Inc., and the Purchaser Filing Persons believe that Messrs. Winter and Millstone can utilize that experience to effectively manage the Company’s business for the benefit of stakeholders.
|