W.R. Grace Agrees To Discuss 40 North’s Improved Buyout Offer; Shares Jump 8%

W.R. Grace & Co. stock gained 7.9% on Friday after the chemicals business operator agreed to enter into talks to discuss the improved buyout offer by investment management company, 40 North Management. Shares closed at $63.25 per share.

In a letter, W.R. Grace’s (GRA) CEO Hudson La Force wrote that “We are willing to discuss a sale of Grace to 40 North in the context of our ongoing review of strategic alternatives.” The company said that the deal price will need to reflect “the full value of Grace for its shareholders.”

Notably, back in Nov. 2020, 40 North had offered $60 per share to buy Grace. However, Grace had turned down 40 North’s buyout offer as it undervalued the company. On Jan. 11, 40 North revised its proposal offer and raised the price to $65 per share.

Grace said that its leadership positioning, value-selling capabilities, and capital allocation strategies provide a strong underpinning to generate substantial value after the merger or even as a standalone company. (See GRA stock analysis on TipRanks).

Following the latest developments on the deal, Wells Fargo analyst Michael Sison sees an “increased likelihood of an agreement coming to fruition.” For now, the analyst maintained a Hold rating and a price target of $60 (5.1% downside potential) on the stock.

Overall, consensus among analysts is a Moderate Buy based on 4 Buys and 2 Holds. The average analyst price target of $62.50 implies downside potential of about 1.2% to current levels. Shares have fallen about 6.5% over the past year.

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