In response to First Reserve Corp’s and SK Capital Partners’ revised acquisition offer for TPC Group (NASDAQ: TPCG) and TPC Group’s termination of talks with Innospec Inc. and Blackstone Group LP, Sandell Asset Management’s Chief Executive Officer Thomas E. Sandell sent today the following letter to TPC Group’s Board of Directors:
Board of DirectorsTPC Group Inc.5151 San Felipe, Suite 800Houston, Texas 77056Attn: Michael McDonnell, President, Chief Executive Officer, Director
As you know, we are the beneficial owner of approximately 1.1 million shares, or 7.0%, of TPC Group. As such, we were pleased to see your announcement that First Reserve and SK Capital had increased the amount they were prepared to pay to acquire TPCG to $45 per share, confirming our view that their $40 per share offer was inadequate.
However, we were distressed by your announcement that you had terminated discussions with Innospec and Blackstone. Innospec had stated on October 21st that it expected that its due diligence review of TPCG would take approximately six weeks, so apparently you have cut them off prior to their completing their work. As a strategic buyer with synergy savings, it is hard to imagine that Innospec could not pay more than financial buyers like First Reserve and SK Capital, and the statements in your press release speculating as to why the acquisition might not be attractive to Innospec were laughable. By cutting off their diligence before they had the opportunity to be fully informed regarding TPCG's value, in order to accept an increased offer below the top of Innospec's preliminary indicative bid range, it appears to us that you have, yet again, engaged in a flawed process to advantage management's favored bidder. Furthermore, we believe that by allowing Innospec to complete its due diligence, it would assure that all bidders have been given an equal opportunity at reviewing the due diligence material and thereby have a level playing field in this process.