First Reserve and SK Capital Enter into Revised Agreement to Acquire TPC
Group for $45.00 Per Share in Cash
HOUSTON -- November 08, 2012
First Reserve Corporation, a leading global investment firm dedicated to the
energy industry, and SK Capital Partners, a U.S.-based private investment firm
focused on the chemicals sector, today announced they have entered into a
revised merger agreement with TPC Group, Inc. (NYSE: TPCG), pursuant to which
First Reserve and SK Capital have increased the per share price to acquire all
of the outstanding shares of TPC to $45.00 in cash. The revised price
represents a 12.5% increase over the previously agreed price of $40.00 per
share announced on August 27, 2012.
TPC has announced a special meeting of shareholders on December 5, 2012 to
vote on the merger. Two of TPC’s largest shareholders, QVT Fund and One East
Partners, which together represent over 21% of the outstanding common stock,
have signed voting agreements in support of the transaction.
First Reserve and SK Capital noted the following regarding its agreed
*The transaction provides attractive value and certainty for TPC
*The $45.00 per share offer provides a 34.4% premium to TPC's closing
price on July 24, 2012, the last unaffected trading day prior to
media reports of a possible acquisition of TPC, and an 85.2% premium
to TPC’s closing price on December 5, 2011, the day on which First
Reserve and SK Capital first indicated their interest.
*The transaction, which is fully financed and is expected to receive
its final regulatory approval by November 15^th, could be completed
shortly after the TPC shareholder meeting, and TPC shareholders could
receive their consideration before year-end.
In light of the revised merger agreement terms, the Board of Directors of TPC
terminated discussions with Innospec (NASDAQ: IOSP) and Blackstone (NYSE: BX)
concerning the previously announced non-binding expression of interest to
explore an acquisition of TPC at a price of $44-$46 per share. First Reserve
and SK Capital noted the following:
*A binding offer from Innospec and Blackstone, which has not materialized,
lacks strategic merit and potentially transfers control to Blackstone:
*There is little strategic fit between Innospec and TPC, with
synergies largely limited to corporate overhead savings. In addition,
any combination could result in significant negative synergies
resulting from Innospec’s competition with TPC customers, the
magnitude of which could far exceed any realizable cost savings.
*An acquisition of TPC by Innospec is contrary to the stated
acquisition strategy of Innospec, which has been focused on
downstream, high margin, high growth companies, and the proposed
combination would likely lead to significant margin dilution for
*Any binding offer would require agreement between Innospec and
Blackstone on the terms of Blackstone’s investment in Innospec.
Depending on its structure, an Innospec shareholder vote could be
required, introducing further risk into the closing process. The
transaction could also transfer effective control to Blackstone and
would likely be highly dilutive to Innospec shareholders.
*Even if a binding offer is made, any potential transaction with Innospec
and Blackstone would subject TPC shareholders to a number of additional
risks and therefore would have to be at a substantially higher price in
order for TPC shareholders to realize equivalent value:
*No deal with Innospec/Blackstone could close until 2013 due to, among
other things, their need to complete due diligence, arrange financing
and receive regulatory approvals.
*The additional time required would expose TPC shareholders to
significant execution risk until the ultimate closing of an
Innospec/Blackstone deal. TPC shareholders would also suffer the
negative economic impact related to the time value of money and
impending tax law changes.
*TPC shareholders would, therefore, need to receive a substantially
higher offer from Innospec/Blackstone to compensate for the material
risks compared to the fully financed transaction already agreed to
with First Reserve and SK Capital and supported by two of TPC’s
About First Reserve Corporation
Founded in 1983, First Reserve Corporation is a leading global investment firm
dedicated to the energy industry with over $23 billion of raised capital since
inception. With offices in North America, Europe and Asia, First Reserve is
well-positioned to make strategic investments on a global basis across the
energy value chain. First Reserve seeks to create value for its investors by
applying its deep industry knowledge, decades of investing and operational
experience, highly talented management team and powerful network of global
relationships to its investments and through active monitoring of its
portfolio companies. For additional information, please visit the First
Reserve website at www.firstreserve.com.
About SK Capital Partners
SK Capital Partners is a private investment firm with a disciplined focus on
the specialty materials, chemicals and healthcare sectors. SK Capital’s
integrated, multi-disciplinary team utilizes its industry, operating and
investment experience to support the transformation of businesses into higher
performing companies. Located in New York, NY and Boca Raton, FL, SK Capital
is currently investing SK Capital Partners III, L.P., a $500 million fund of
committed capital, and its portfolio companies generate revenues of over $3.0
billion annually and employ more than 3,400 people. Please visit
www.skcapitalpartners.com for more information.
Sard Verbinnen & Co
Jim Barron/Pamela Blum
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