W.R. Grace, a specialty chemical company, has agreed to acquire the fine chemistry services business of Albemarle for approximately $570 million ($300 million upfront in cash and $270 million in equity).

The acquisition adds analytical, regulatory and manufacturing capabilities to Grace’s existing pharma portfolio focused on chromatographic resins, formulation excipients, drug delivery, and pharmaceutical intermediates and active pharmaceutical ingredients (APIs). As part of the transaction, Grace will acquire Albemarle’s operations in Tyrone, Pennsylvania, and South Haven, Michigan.

Under the agreement, Grace will pay Albemarle a total of $570 million, which includes $300 million in cash upon closing and $270 million in non-participating preferred equity in a newly created Grace subsidiary. The preferred equity will not receive any dividends for a period of two years following the closing of the transaction.

The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, including receipt of certain regulatory approvals.

Grace is currently undertaking a review of potential strategic alternatives for the company. In January (January 2021), Grace received a revised unsolicited bid for the company for $65 per share from 40 North Management LLC, a private investment firm and a current shareholder of Grace. 40 North had earlier offered $60 per share in November (November 2021), which Grace rejected. Grace said in January that it will review the firm’s revised offer. 40 North is part of Standard Industries, a building materials company.

For 2020, Grace’s sales were down 11.7% to $1.73 billion, and it posted a net loss of $1.8 million, an improvement over 2019 when it posted a net loss of $126.3 million. Its pharmaceutical related businesses are part of its Materials Technologies segment, which posted net sales of $458.4 million in 2020, a 0.7 gain year over year.

Source: W.R. Grace (Albemarle’s fine chemicals acquisition), W.R. Grace (2020 financial results), W.R. Grace (revised 40 North bid) and Albemarle