Geoff Gannon April 25, 2006

Engelhard Corporation Announces Recapitalization Plan

News

New Jersey based chemicals company Engelhard Corporation (EC) has announced a recapitalization plan in response to the unsolicited offer made by rival BASF (BF). The shareholder response to BASF’s tender offer had been very limited. BASF originally offered $37 a share. That bid was later raised to $38 a share.

This morning Engelhard announced it will repurchase 26 million shares at $45 a share. This is about 20% of the shares outstanding. The company also announced certain “incremental cost savings”. All of this seems to be the result of a plan to study alternatives to the BASF bid.

Additional Information

The company’s preliminary proxy materials to be filed today with the Securities and Exchange Commission (SEC) – and the self-tender offer materials to be filed with the SEC and distributed to shareholders — set out in greater detail the reasons for the belief that the recapitalization plan represents the best value-creation alternative for Engelhard shareholders…Additional material on the plan is also available on www.engelhard.com.

Engelhard is increasing its board from 6 members to 9 members. The increase is related to the BASF bid and the reorganization plan.

Shares of Engelhard closed at $38.30. They were at $38.65 in pre-market trading.

Other Details

The self-tender offer is expected to commence during the week of May 1, 2006 and expire at a date following the Annual Meeting of Shareholders set for June 2, 2006. If, following the Annual Meeting, individuals nominated by BASF constitute a majority of the Engelhard board, the board will have the ability to withdraw the self-tender offer. Closing of the self-tender offer would also be subject to the Engelhard board not recommending acceptance of an amended offer that BASF may choose to make as well as to receipt of financing and other customary conditions.

Note: Please research this matter before taking any action. The information provided above is not sufficient to make an informed investment decision.

I would suggest you start by visiting Engelhard’s website and reviewing any SEC filings. This post was written in the early morning; new information may have become available after it was written.

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