Oscar Gruss Starts Georgia Gulf Corp. (GGC) at Hold; Westlake (WLK) Makes an Offer
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Price: $54.58 --0%
Rating Summary:
1 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
1 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Oscar Gruss initiates coverage on Georgia Gulf Corp. (NYSE: GGC) with a Hold. PT $42.00.
Oscar analyst says, "We believe that GGC is willing to merge with Westlake Chemical (NYSE: WLK), but only on substantially improved terms. We infer from the rejection letter that GGC’s Board released on 1/16/12 (which mentions the stock price’s 52-week high of $40.59/share twice) that GGC might be induced to negotiate if WLK increases if offer to close to $40.00/share. The final offer price is likely to depend on the form of the consideration: GGC’s Board has clearly indicated that it wants its shareholders to participate in any rebound in profitability driven by a recovery in PVC pricing. Thus, we believe that the Board will require deal terms which either (1) include a stock component or, (2) if an all-cash deal, are at a price level that fully compensates shareholders for giving up future share appreciation. As for WLK’s willingness to significantly increase its offer, we note that we do not see another potential target that offers the same combination of moderate size and complementary product lines. While it is possible that the companies may not be able to agree on deal terms, we think that, absent WLK’s refusal to offer a price that is palatable to the GGC Board, these two companies are likely to be joined."
For an analyst ratings summary and ratings history on Georgia Gulf Corp. click here. For more ratings news on Georgia Gulf Corp. click here.
Shares of Georgia Gulf Corp. closed at $35.17 yesterday.
Oscar analyst says, "We believe that GGC is willing to merge with Westlake Chemical (NYSE: WLK), but only on substantially improved terms. We infer from the rejection letter that GGC’s Board released on 1/16/12 (which mentions the stock price’s 52-week high of $40.59/share twice) that GGC might be induced to negotiate if WLK increases if offer to close to $40.00/share. The final offer price is likely to depend on the form of the consideration: GGC’s Board has clearly indicated that it wants its shareholders to participate in any rebound in profitability driven by a recovery in PVC pricing. Thus, we believe that the Board will require deal terms which either (1) include a stock component or, (2) if an all-cash deal, are at a price level that fully compensates shareholders for giving up future share appreciation. As for WLK’s willingness to significantly increase its offer, we note that we do not see another potential target that offers the same combination of moderate size and complementary product lines. While it is possible that the companies may not be able to agree on deal terms, we think that, absent WLK’s refusal to offer a price that is palatable to the GGC Board, these two companies are likely to be joined."
For an analyst ratings summary and ratings history on Georgia Gulf Corp. click here. For more ratings news on Georgia Gulf Corp. click here.
Shares of Georgia Gulf Corp. closed at $35.17 yesterday.
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