Orica, a commercial explosive maker listed in Australia, has rejected a A$10 billion ($8.3 billion) or A$32 a share offer, from a consortium of private equity firms.
The consortium, which includes Bain Capital, Blackstone Capital Partners, Pacific Equity Partners and Morgan Stanley Principal Investments, has not indicated whether it plans to submit a higher offer, according to a spokeswoman at Orica.
On the same day that Orica’s board decided to reject the buyout proposal, the company’s shares jumped to a high of A$34.86, before closing up 20 percent at A$33.50. The share price has since held steady and risen a further 1 percent, hovering around the A$34 per share mark.
Don Mercer, chairman of Orica, said that after carefully considering the offer, the board “believes that it significantly undervalues Orica and its growth prospects.” He added that total shareholder returns over the five previous years have been more than 500 percent, substantially outperforming the S&P/ ASX 200 accumulation index.
“Orica has been through a substantial portfolio transition over that time including the recent Dyno Nobel and Minova acquisitions, and the divestment of various non-core businesses,” he added.
Orica has been advised by UBS and Mallesons Stephen Jaques.