Hercules Makes a Stronger Bid

The battle for Britain’s Allied Colloids Group intensified Monday as U.S. chemical company Hercules Inc., stung by news that its takeover target was in talks with another potential partner, raised its bid twice in one day.

Hercules, which has been fighting for control of the British specialty chemicals company since November, raised its offer to a final $3.18 per Allied Colloids share, valuing the company at $2.2 billion.

Allied Colloids stock soared as the fight mounted, and closed the day 16.62% higher at about $3.20.

Just seven hours earlier, Hercules raised its bid to about $2.85 a share, only to hear within minutes that Allied Colloids was in talks with Swiss-based Ciba Speciality Holdings Inc. about a potential friendly offer.

The substantially higher offer from Hercules in the afternoon did not mark the end of the battle.

As the London stock market closed and investors mulled over Hercules’ revised bid, Ciba promptly shot back, saying it was considering whether to increase its own possible offer, of nearly $3 a share, having revealed it had already bought 4.57% of Allied Colloids shares in the market.

Ciba stressed that it had not yet announced a formal offer, a move that would restart the bid timetable for Hercules and allow the U.S. company to present a fresh offer.

Amid the cross-fire, Allied Colloids advised its shareholders, who have seen their shares rise in value by more than 50% since Hercules’ original bid was announced in November, to sit tight.

Wilmington, Del.-based Hercules said that its new offer is more than acceptable.

“Our second final offer . . . is more than generous, and we are confident that shareholders will see it as such,” Hercules Chairman Keith Elliott said in a statement.

Sources close to the negotiations disclosed how frantic the jousting over Allied Colloids had become in the last few days. They told Reuters that Ciba and Allied Colloids had started talking only after Colloids published its final defense document Friday.