Reichhold OKs Dainippon’s Sweetened Bid

Reichhold Chemicals Inc. on Tuesday agreed to a sweetened $60-a-share cash buyout offer from Japan’s Dainippon Ink & Chemicals Inc., a deal the companies valued at about $600 million.

Word of the agreement came hours after Dainippon, which had a hostile $473-million buyout offer pending, and Reichhold disclosed that they were engaged in merger negotiations following months of sometimes sharp exchanges between the two companies.

Directors of Reichhold, a White Plains, N.Y.-based producer of adhesives and polymers, unanimously approved the sweetened offer and indicated that they would recommend that shareholders tender their stock to Dainippon.

The board had rejected as inadequate the unsolicited $52.50-a-share tender offer Dainippon launched June 25 and said it would consider alternatives that might include a buyout by another company.

Dainippon, which had about $2.6 billion in sales during the year ended March 31, is one of Japan’s top diversified chemical companies.

Would Terminate Litigation

The firm already owns about 4.5% of Reichhold’s 9 million common shares outstanding.

Eugene Stevenson, a Reichhold spokesman, valued the buyout at about $600 million, including the stock purchase, conversion of debt and other costs.

Under the agreement, Reichhold granted Dainippon an option to purchase 1.38 million shares of Reichhold stock and agreed to pay Dainippon a $9.2-million “breakup fee” in the event the merger was terminated under certain circumstances.

The companies also agreed to terminate pending litigation stemming from the hostile bid.

“This offer represents excellent value for our shareholders,” C. Thomas Powell, Reichhold’s chairman and chief executive, said in a news release.

Shigekuni Kawamura, president of Dainippon, said in a news release that the merger would help his company reach its goal of being a leader in its key market segments, such as its ink and chemicals businesses.

Reichhold stock rose $1.625 a share to $59.625 in active trading on the New York Stock Exchange on Tuesday.