ATLANTA--(BUSINESS WIRE)--Jan. 16, 2012--
Georgia Gulf Corporation (NYSE: GGC) announced today that its Board of
Directors has rejected Westlake Chemical Corporation’s unsolicited
proposal to acquire Georgia Gulf for $30.00 per share.
“The Georgia Gulf Board and management team are committed to enhancing
value for all stockholders and as such we have carefully reviewed
Westlake’s unsolicited proposal,” said Paul Carrico, President and Chief
Executive Officer. “After careful consideration, Georgia Gulf’s Board
determined that Westlake’s proposal is financially inadequate and not in
the best interest of Georgia Gulf stockholders. We believe the Westlake
proposal is an opportunistic attempt to acquire the Company’s uniquely
positioned assets as we recover from an unprecedented downturn in the
industries we serve and a volatile public equity market, and thereby
deprive our stockholders of the Company’s inherent value.”
Georgia Gulf communicated its response in a letter to Albert Chao,
President and Chief Executive Officer of Westlake, the text of which
follows:
“Notwithstanding that your January 13th letter merely reiterated your
unsolicited September 20th proposal to acquire Georgia Gulf for $30.00
per share, the Georgia Gulf Board of Directors once again carefully
reviewed your proposal with the assistance of financial and legal
advisors in light of developments since last autumn. In doing so, the
Georgia Gulf Board again determined that your proposal is financially
inadequate and not in the best interest of Georgia Gulf stockholders.
“The Georgia Gulf Board considered a number of factors in rejecting your
proposal, including:
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The Board believes your proposal takes advantage of a dislocation
in public market valuations in order to deprive Georgia Gulf
stockholders of the intrinsic value in their investment. At the
time of your initial approach in September, Georgia Gulf’s common
stock was valued at just 4.5 x enterprise value to Wall Street’s
consensus one-year-forward EBITDA estimate, and its share price had
contracted 54% compared to its 52-week high of $40.59 per share just a
few months earlier. We believe the public market valuation at the time
of your initial approach was an aberration driven by the global
economic uncertainty taking place during the third and fourth quarters
of 2011. In fact, as you are well aware, market valuations in our
industry have begun to recover, with Georgia Gulf’s share price
appreciating over 30% since you made your initial proposal. We believe
our outperformance of Westlake and other companies in our peer group
over that period is a recognition of the unique value and economic
leverage of an investment in Georgia Gulf.
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The Board believes that Georgia Gulf is well positioned for value
creation for its stockholders. We believe the Westlake
proposal undervalues the Company by failing to acknowledge Georgia
Gulf's significant ability to leverage improving global PVC demand and
its access to comparatively low-cost U.S. shale gas. These factors,
along with our highly integrated asset base and our logistical
abilities to access key export markets, provide Georgia Gulf with
an opportunity to significantly outperform going forward. Our uniquely
situated assets and focused business model, combined with the rapidly
developing U.S. shale gas infrastructure, should serve to multiply
our profitability with any recovery in economic demand. Additionally,
it should be noted that even in an environment of historically low
economic activity, Georgia Gulf today is generating near-record levels
of adjusted EBITDA and strong free cash flow.
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The Board believes your proposal is not compelling by any metric.
Westlake’s proposal reflects only a 23% premium to Georgia Gulf’s
trading price of $24.48 per share on the last trading day prior to
Westlake’s public proposal. The proposal also represents a discount
of 26% to our 52-week high. In addition to not reflecting Georgia
Gulf’s standalone value, we believe that the proposal clearly does not
reflect any of the potentially large synergies that would accrue only
to Westlake stockholders and, in particular, the Chao family as the
approximately 70% controlling stockholder of Westlake. In short,
nothing in your proposal can be viewed as compelling when compared to
relevant benchmarks and, most importantly, to what we view as
appropriate value for Georgia Gulf stockholders.
“Georgia Gulf also believes that the statements in your January 13th
letter that we were unwilling to provide information or enter into
substantive discussions with you are simply not true. Indeed, despite
your inadequate and highly opportunistic proposal, we have repeatedly
told you we would be willing to engage in discussions with you to
demonstrate the substantial underlying value of Georgia Gulf, and
provide you with confidential information, provided that Westlake signed
a customary confidentiality agreement that would protect Georgia Gulf’s
legitimate interests.
“Following receipt of your September 20th letter, and over a
more than three-month period, we engaged with you and your legal
advisors to negotiate such a confidentiality agreement. The idea that we
would have these sorts of highly sensitive discussions with a
substantial direct competitor without the protection of a standard
confidentiality agreement is neither customary nor acceptable to the
Georgia Gulf Board. Yet you refused to sign the agreement and were
unable or unwilling to provide a coherent reason why. In late December,
and at our suggestion, we traveled to Houston to meet with you in
person, where it became apparent to us that you were not interested in
engaging in substantive discussions. Simply put, it was Westlake’s
refusal to enter into a standard confidentiality agreement that
prevented discussions from moving forward. We now believe that
Westlake’s plan all along was simply to take advantage of Georgia Gulf’s
temporarily depressed share price, as demonstrated by Westlake’s
accumulation of a large position in Georgia Gulf’s common stock. Your
mischaracterization of our discussions to date combined with your public
announcement of a proposal that significantly undervalues Georgia Gulf
leads us to the conclusion that your desire was to circumvent our good
faith efforts over the last several months.”
Georgia Gulf Advisors
Barclays Capital and J.P. Morgan are serving as Georgia Gulf’s financial
advisors and Jones Day and Richards, Layton & Finger are acting as legal
counsel.
About Georgia Gulf
Georgia Gulf Corporation is a leading, integrated North American
manufacturer of two chemical lines, chlorovinyls and aromatics, and
manufactures vinyl-based building and home improvement products. The
company's vinyl-based building and home improvement products, marketed
under the Royal Building Products and Exterior Portfolio brands, include
window and door profiles, mouldings, siding, pipe and pipe fittings, and
deck, fence and rail products. Georgia Gulf, headquartered in Atlanta,
Georgia, has manufacturing facilities located throughout North America
to provide industry-leading service to customers. For more information,
visit www.ggc.com.
Forward-Looking Statements Disclaimer
This news release contains "forward-looking statements" as defined in,
and subject to the safe harbor provisions of, the federal securities
laws. These forward looking statements relate to, among other things,
our anticipated financial performance, prospects and our plans and
objectives for future operations. Forward-looking statements are based
on management’s assumptions regarding, among other things, general
economic and industry-specific business conditions and the continued
execution of our long-term business strategy as a stand-alone public
company, and actual results may be materially different. Risks and
uncertainties inherent in these assumptions include, but are not limited
to, uncertainties regarding future actions that may be taken by Westlake
in furtherance of its unsolicited proposal, future prices for our
products, industry capacity levels for our products, raw materials and
energy costs and availability, feedstock availability and prices,
changes in governmental and environmental regulations, the adoption of
new laws or regulations that may make it more difficult or expensive to
operate our businesses or manufacture our products, our ability to
generate sufficient cash flows from our business, future economic
conditions in the specific industries to which our products are sold,
global economic conditions, the effectiveness of certain previously
disclosed and recently implemented changes to our internal control over
financial reporting, our ability to successfully integrate and execute
our business plans for acquisitions and other factors discussed in the
Securities and Exchange Commission filings of Georgia Gulf Corporation
from time to time, including our Annual Report on Form 10-K for the year
ended December 31, 2010 and subsequent quarterly reports on Form 10-Q.
Source: Georgia Gulf Corporation
Investor Relations
Georgia Gulf Corporation
Martin
Jarosick, 770-395-4524
or
Innisfree M&A Incorporated
Arthur
Crozier, Jennifer Shotwell or Scott Winter, 212-750-5833
or
Media
Georgia
Gulf Corporation
Alan Chapple, 770-395-4538
chapplea@ggc.com
or
Joele
Frank, Wilkinson Brimmer Katcher
Matthew Sherman, Michael Freitag
or Eric Bonach, 212-355-4449
