Deputy City Editor
Imperial Chemical Industries' proposed £179m takeover of Grow, the New York-based architectural paint and coatings business, ran into trouble yesterday after one of America's best-known paint manufacturers stepped into the fray and filed lawsuits against both Grow and ICI.
Sherwin-Williams trumped ICI's $18.10 tender offer for Grow's shares with a higher bid worth $19.50 a share or $320m. It said its tender was conditional on Grow's directors removing a "poison pill" rights plan and an $8m lock-up fee that had been granted to ICI.
Sherwin-Williams' chief executive, John Breen, said: "Because Grow Group's management and board of directors decided to sell their company and to exclude Sherwin-Williams from the bidding process, we have commenced this tender offer so our superior proposal can be communicated directly to all Grow Group's shareholders.
"At the price we are offering, we think the combination of the two companies will be beneficial to the shareholders of both companies."
Sherwin-Williams accompanied its bid with lawsuits, filed in Ohio and New York, against Grow, its directors and ICI. The writs claimed that Grow's directors had breached their fiduciary duties in approving a merger with ICI and said their filings with the SEC were defective.
ICI launched its bid on 1 May after securing a recommendation from Grow's directors, who also agreed to the sale to ICI by Corimon, a Venezualan corporation, of its 25 per cent stake.
Sherwin-Williams said it had repeatedly advised Grow of its strong interest in acquiring the company but had been rebuffed. It said it was willing to enter into a merger agreement with Grow on substantially the same terms and conditions as ICI.
ICI's bid for Grow was the latest move in a consolidation of its position in the $18bn North American paint market. It first became an important player there in 1986 with the acquisition of Glidden Paints for $500m. Last year it expanded the operation, buying California-based Decratrend Paints, bringing the division's sales to around $1bn a year.
An ICI spokesman refused to comment yesterday on Sherwin-Williams' move.