Wednesday, March 14, 2007

Rain, Oxbow bids C$13.50 for GLC Carbon; draws Rain Commodities into bidding war

US-based Oxbow Carbon & Minerals Holdings, Inc. has bettered Rain Commodities’ offer of C$ 13.25 for the assets of Great Lakes Carbon Income Fund consisting of 73.56% ownership interest in GLC Carbon USA, Inc., the world’s biggest calcinated petroleum coke (CPC) maker.

Rain had acquired 20% ownership in the GLC Income Fund in March 2006 at an enterprise value for GLC Carbon at $656 mn. The company was looking at buying out the remaining equity and had entered into an agreement with the GLC Income Fund at a price of C$11.60 per unit. Oxbow entered the bidding on March 7 with an offer of C$13 per unit, forcing Rain to increase the bid to C$13.25. However, Oxbow seems to have bettered Rain’s revised bid with an offer of C$13.50 on Monday.

Oxbow is the world’s largest marketer of petroleum coke, a byproduct of oil refining, used in the production of electrodes for the steel and aluminum industries. Acquiring GLC Carbon will clearly give Oxbow a strangle-hold over the global market. Likewise for Rain, the acquisition means adding to its own substantial CPC capacity through wholly owned subsidiary Rain Calcining which will give it 28% market share in the West and a footprint across the Middle East, US and Argentina.

GLC Carbon has three plants in the US and one in Argentina. Rain has five days to make a revised offer. Oxbow also holds 5% equity in Rain Calcining which is set to be merged with the parent later this month. Rain stands to gain a break-up fee of C$17 mn in case GLC accepts another offer.

Read the article in DNA Money.
Related Post:
Rain Commodities enters bidding war for GLC Carbon; raises bid price

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