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Engelhard Rejects Sale Offer By BASF

Posted on: Monday, 23 January 2006, 21:00 CST

By Hugh R. Morley, The Record, Hackensack, N.J.

Jan. 24--Engelhard Corp. on Monday rejected an unsolicited $4.9 billion purchase offer by German chemicals giant BASF.

The New Jersey company, based in the Iselin section of Woodbridge, issued a release saying the offer was inadequate and said alternatives would be examined, including a sale.

Company CEO Barry W. Perry called the offer "opportunistic," adding that it "undervalues Engelhard."

"We have made significant investments in recent years in both organic growth initiatives and strategic acquisitions," he said, in a release. "Our business plans reflect that these actions have positioned us to generate strong earnings growth over the next several years."

There was no immediate response from BASF late Monday afternoon. The company on Jan. 9 began its effort to buy a majority of Engelhard shares.

The German company has offered $37 a share, about 23 percent higher than the stock price before the purchase effort became public.

BASF also said it would pay an additional $1 a share if Engelhard could justify the price.

Shares closed Monday at $39.71, up 13 cents.

Michael Judd, president of Greenwich Consultants, a Rumson-based independent research company, said he wasn't surprised at Engelhard's rejection of the offer.

He said he believes that Engelhard is worth $40 to $43 to BASF, adding, "Hopefully they will put in a higher bid."

The rejection comes about three weeks after BASF revealed that it first spoke to Engelhard about an acquisition in December. After initial discussions with Perry, Engelhard refused to meet with BASF officials, according to the German company.

When BASF began buying shares, Engelhard urged shareholders to defer taking action, saying it would evaluate the offer.

Engelhard develops, manufactures and markets emission control and other technologies. Aside from the company headquarters in Iselin, Engelhard has facilities in Union, for research and development, and East Newark, for manufacturing. The facilities employ about 10 percent of the company's 6,500 workers.

Engelhard's most well-known product is the catalytic converter, which reduces vehicle emissions pollution. Analysts say that the company has positioned itself as the leader in emissions technology and could expect considerable growth due to an expanding global market and increasing regulation in the U.S. and other countries.

Perry said Monday the company is poised to exploit the global demand for energy-friendly and environmentally friendly fuels. He said the company, which also supplies ingredients for cosmetics, foresees a growth in that business, fueled by the global trend toward youth and health.

"Given our unique market position and attractive growth opportunities, the board believes this is the appropriate time to explore strategic alternatives to seek maximum value for shareholders," he said.

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Copyright (c) 2006, The Record, Hackensack, N.J.

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EC, BF, BAS,

Source: The Record - Hackensack, New Jersey

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