Dow Agrees to Buy Essex Chemical : Surprise Sale Rescues Company From Bid by Swiss Firm

Dow Chemical Co. agreed Monday to acquire Essex Chemical Corp. for $367 million, rescuing it from the unwelcome advances of Switzerland’s Gurit-Heberlein AG.

Dow Chemical’s $36-a-share price for all of Essex’s outstanding shares easily tops Gurit’s offer for a controlling stake in Essex of $32 a share, a conditional offer that was rejected last week by Essex’s board.

In a joint statement, the two American companies said Dow Chemical will conduct a tender offer for all of Essex’s 10.2-million shares outstanding. The merger is subject to Dow Chemical’s receipt of at least two-thirds of those shares.

Will Merge With Dow Unit

“Essex complements Dow’s businesses, particularly in the automotive industrial adhesives and sealants areas,” said Dow chief executive Frank P. Popoff. “Essex will further enhance Dow’s strong specialties emphasis.”

The Clifton, N.J.-based firm also makes industrial chemicals, refrigerant gases and generic drugs.

“We are pleased to reach an agreement with a well respected and ably managed company like Dow. Essex’s shareholders will receive exceptional value for their shares,” said Essex Chairman L. John Polite.

Popoff said he hoped Essex, which will be merged with a Dow subsidiary and become a wholly-owned unit, will retain a good working relationship with Gurit, its joint-venture partner for many years.

Gurit, which also makes sealants, plastics and specialty chemicals, upset that relationship when it made an unsolicited $24-a-share tender offer for a majority of Essex in late May.

It later raised its bid to $30 a share and proposed a conditional $32-a-share offer, all of which were rejected by Essex’s board.

Essex obtained a federal court order temporarily blocking Gurit’s bid and directed its advisers, Paine Webber Inc. and Thomson McKinnon Securities Inc., to explore alternative transactions.

However, Dow Chemical’s decision to purchase Essex is likely to come as a surprise to industry analysts who did not generally expect Essex to find a suitor.

Dow Chemical, based in Midland, Mich., makes chemicals, plastic materials, agricultural and consumer products, and pharmaceuticals.