Canexus board advises shareholders to reject Chemtrade takeover offer as too low

CALGARY – The CEO of Canexus Corp. (TSX:CUS) says the fact that more than two million of the company’s shares traded Wednesday at prices higher than a hostile takeover offer proves that many investors think a superior bid will emerge.

Doug Wonnacott refused to say if such a bidder has approached the chemical company, but said Canexus has a process in place to invite rivals to better Chemtrade Logistics Income Fund’s offer of $1.50 per share.

Canexus shares closed up two cents at $1.53 on the Toronto Stock Exchange on Wednesday.

“At $1.53, you have to believe people are expecting something significantly higher than a $1.50,” Wonnacott said in an interview.

The board of Canexus Corp. urged shareholders Wednesday to reject the Chemtrade offer, which values the chemical company at $884 million including assumed debt.

The Calgary-based sodium chlorate producer said its board believes Chemtrade’s offer is too low.

Chemtrade (TSX:CHE.UN) said on Oct. 3 that it was taking its offer directly to Canexus shareholders after it was rejected by the company’s board in September.

It has said that its offer is fair and in line with what was offered by Superior Plus, which had negotiated a friendly merger with Canexus last year that fell apart in June after a U.S. agency said it would raise objections.

Since Chemtrade’s offer to shareholders two weeks ago, Canexus has appointed David Collyer as chairman of its board following the death of Hugh Fergusson, 68.

Billionaire energy executive Murray Edwards, chairman of Canadian Natural Resources (TSX:CNQ), also recently increased his stake in Canexus to 9.5 per cent by acquiring an additional 1.2 million shares.

Wonnacott said Edwards is believed to be the largest single shareholder in Canexus. He said 60 to 70 per cent of the company’s shares are held by institutional shareholders such as pension funds.

Canexus said its directors’ circular will be mailed to shareholders with more detail about the “extensive engagement” between the two chemical companies.

“The Chemtrade offer does not represent full and fair value for Canexus,” said Art Korpach, who chairs the Canexus board’s special committee for evaluating proposals and alternatives, in the earlier statement.

“We have a strong ongoing business that is positioned to deliver increased value to shareholders. As demonstrated by past behaviour, your board is not opposed to a sale of the company as long as a sale reflects full and fair value for our assets and our growth potential. The Chemtrade offer simply doesn’t do that.”

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