By Jonathan Underhill
Allnex Belgium SA has proposed buying Nuplex Industries to create one of the world's largest makers of coating resins.
Allnex, which is controlled by US private equity firm Advent International, would offer $5.55 a share for Nuplex, valuing the target at $1.05 billion.
The price was a 44 percent premium to the New Zealand company's Friday trading price close of $3.86 and includes any dividends paid between now and settlement of the proposal, it said.
The shares surged 35 percent to $5.20 today, having earlier touched a seven-year high of $5.26.
"[Nuplex] has stable, strong businesses in a global environment that is still murky," said Shane Solly, portfolio manager at Harbour Asset Management.
The fact that the shares haven't jumped to the offer price may reflect the conditionality of Allnex's proposal, he said.
Nuplex said it had been in confidential talks with Advent and had initially turned down its offer, but after three revisions the price was now deemed to be attractive.
"After careful examination, the board of Nuplex considers the offer to be attractive for Nuplex's shareholders," the company said.
"As the board believes engaging further with Allnex and Advent is in the best interests of shareholders, Nuplex is entering into advanced discussions and due diligence with the aim to agree a binding scheme implementation agreement."
As a result, Nuplex has granted Allnex and Advent a period of exclusivity for six weeks.
Any transaction would then need to be voted on by Nuplex shareholders and the company urged them to take no action prior to receiving documentation and the board's recommendation.
"The board believes that this proposal, from a credible trade buyer, is attractive and shareholders should have the opportunity to consider its merits if an agreement can be reached by the parties," said chairman Peter Springford.
Allnex, formerly Cytec Industries' coating resins business, was acquired by Advent in 2013 for US$1.15 billion (NZ$1.74 billion), with sales of about $US1.5b.