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GAF Shifts to All-Cash Offer for Carbide Stock

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Associated Press

By amending the terms of its $4.12-billion bid to buy Union Carbide, GAF Corp. has made the offer more appealing to the chemical giant’s shareholders and harder for Union Carbide to resist, merger specialists said Friday.

GAF, a specialty chemicals and building materials maker based in Wayne, N.J., sweetened its hostile bid by offering to pay $68 a share for all outstanding shares, whether or not the Union Carbide board approves the merger. The initial offer announced Monday provided for an all-cash purchase only if a “mutually satisfactory merger agreement” between the two companies could be reached.

Under the original two-pronged offer, GAF would have paid $68 apiece in cash for 48 million shares, boosting its stake in Union Carbide to 80% from 10%. GAF began accumulating Union Carbide stock in August. Next, GAF would have acquired the remaining 20% of Union Carbide stock by exchanging preferred stock worth $68 a share.

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GAF decided to increase its offer because it was able to raise more financing than it originally thought it could, analysts said.

The deal would be financed by the sale of high-yield, high-risk bonds, commonly called “junk” bonds. Additional financing is coming from a $1.5-billion line of credit from banks.

In a letter sent Friday to Union Carbide Chairman Warren M. Anderson, Heyman said that “GAF is willing to discuss and negotiate the terms of its proposal.”

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