Allied Colloids faces Herculean battle
15 Jan 2000
Allied Colloids is attempting to fight off a hostile bid from US specialities manufacturer Hercules. The Wilmington, Delaware company has offered £1.1 billion ($1.86 billion) for Colloids, 23 per cent above the trading price. However, as PE went to press, Colloids had rejected the offer, claiming it 'fundamentally undervalues' the company.
The bid came after talks had broken down between Colloids and another (unidentified) bidder. Hercules' chairman, Keith Elliot, believes that the acquisition would fit strategically, with Colloids' strengths in polymers for mineral and textile processing, pollution control, paper making, coatings and resins complementing Hercules's in water-soluble polymers, paper sizing aids and natural gums.
Analysts believe that the Hercules bid is too low, but think that it might flush out other interested parties. Colloids could find itself at the centre of a bidding war, with multinational giants such as Elf Atochem, Dow Chemical, and Rohm and Haas touted as potential suitors.
But Colloids intends to remain independent. The company's posted pretax profits up an impressive 30 per cent on the previous year, at £54.5 million, with sales up 11 per cent on £416 million. Colloids' chairman, David Farrar, insists that the company is not for sale.
