German chemical company BASF AG said Tuesday that U.S. rival Engelhard Corp. has abandoned its resistance to a $5 billion takeover.
Engelhard’s management decided to back BASF’s twice-sweetened offer of $39 a share for the Iselin, N.J.-based company and will recommend that its shareholders accept it, the companies said.
Including debt, the deal is worth about $5.6 billion.
“This is a crucial step toward our goal of acquiring Engelhard,” BASF chief executive Juergen Hambrecht said. “We are confident that Engelhard’s shareholders will tender their shares.”
Engelhard Chairman and CEO Barry Perry said the offer “provides fair value to our shareholders, and the agreement paves the way for an orderly and cooperative transaction.”
Engelhard said it will write to shareholders “shortly” urging them to accept.
Ludwigshafen, Germany-based BASF first bid $37 per share for Engelhard in January, saying that the deal would create a world player in chemical products such as pigments and catalysts.
It had lifted the all-cash offer for a second time, to $39, last week and warned that it would walk away and explore other opportunities if it was rebuffed again.
Engelhard’s managers rejected the earlier offers as too low.
Under the deal announced Tuesday, BASF has dropped unspecified conditions in the original offer to make it more attractive to its shareholders. In return, Engelhard dropped a plan to buy back its own shares that it had unveiled to persuade shareholders to resist BASF’s advance.
Engelhard also said it would adjourn its annual meeting, which BASF had vowed to turn into a test of the shareholders’ resolve, by proposing five new directors for election to the board.
The meeting was pushed back from June 2 to June 30.