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Kraton plans to withdraw recommendation for tie-up with LCY Chemical's SBC.


1 July 2014 - US polymers producer Kraton Performance Polymers Inc (NYSE:KRA) said it has informed Taiwanese chemicals producer LCY Chemical Corp (TPE:1704), with whose styrenic block copolymer (SBC) operations it agreed to merge in January, that Kraton's board plans to withdraw its recommendation in favour of the tie-up.

Kraton cited in the notice to LCY the weakening operating results of the SBC business, which has also led to a slump in Kraton's share price and triggered negative reactions from shareholders.

Pursuant to the agreement, Kraton's recommendation may be altered subject to at least five business days' notice in order to allow LCY to propose revisions to the deal aimed at ensuring continued support by the US firm's board.

Under the terms of the transaction, Kraton's shareholders will exchange each share they own for one share in the combined company. This will result in Kraton's shareholders and LCY each holding 50% in the enlarged firm, which will be incorporated in the UK, will have administrative headquarters in Houston, Texas and will be listed on the NYSE, Kraton has said.

The combination is seen to form a worldwide leading manufacturer in the styrenic block copolymer industry with more that USD2bn (EUR1.5bn) in annual pro forma revenues, Kraton said in January. The US firm noted at the time that enlarged entity is projected to realise annual costs synergies of USD65m on a run-rate basis by 2017.

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Publication:M & A Navigator
Date:Jul 1, 2014
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