Robbins Arroyo LLP: Acquisition of Chemtura Corp. (CHMT) by Lanxess Deutschland GmbH (Private) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Chemtura Corp. (NYSE: CHMT) by Lanxess Deutschland GmbH (Private). On September 25, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Lanxess will acquire Chemtura. Under the terms of the agreement, Chemtura shareholders will receive $33.50 for each share of Chemtura common stock.
Is the Proposed Acquisition Best for Chemtura and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Chemtura is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $33.50 merger consideration represents a premium of only 18.90% based on Chemtura’s closing price on September 23, 2016. This premium is significantly below the average one day premium of nearly 21.95% for comparable transactions within the past three years. Further, the $33.50 merger consideration is significantly below the target price of $35.00 set by an analyst at Longbow Research on April 6, 2015; the target price of $35.00 set by an analyst at SunTrust Robinson Humphrey on May 3, 2015; and the target price of $34.00 set by an analyst at Seaport Global Securities on January 13, 2016.
On July 28, 2016, Chemtura reported strong earnings results for its second quarter 2016. Chemtura reported operating income of $55 million for the three months ended June 30, 2016, a 25% increase from the same period of the prior year. Chemtura has also beaten analyst estimates for adjusted net income and adjusted earnings per share in three of the past four consecutive quarters. In commenting on these results, Chemtura Chief Executive Officer, President, and Chairman of the Board Craig Rogerson remarked, “Our performance in the second quarter continued our strong start to 2016. Our second quarter results delivered meaningful improvement over prior year performance, led by our IEP segment .… We are pleased to have kept pace with our strong first quarter 2016 results and we believe that our first half performance puts us in an excellent position to meet our stated goals for the full year.”
In light of these facts, Robbins Arroyo LLP is examining Chemtura’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Chemtura shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Chemtura shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.