TPC Group draws higher offer

TPC Group is officially in play.  The Houston-based petrochemical company said it received an all-cash offer for $44 to $46 a share from rival Innospec Inc. in a deal financed by the private equity firm Blackstone. The deal, which could be worth as much as $721 million at those prices, tops an earlier $628 million offer that TPC had accepted from First Reserve Corp. of Greenwich, Conn., and New York-based SK Capital Partners.

After reviewing Innospec’s offer, TPC’s board determined it could lead to a bid that’s superior to the $40-a-share deal it accepted in August, the company said in a statement.

The move comes after TPC’s shareholders balked at the August deal, saying the company would fetch a higher price if the board solicited outside offers. TPC  is the country’s biggest maker of butadiene, which is used to manufacture synthetic rubber for car tires and other products. TPC, formerly known as Texas Petrochemicals, controls about one-third of the budadiene market. Demand for the chemical has been weak for much of the year, resulting in lower prices that crimped the company’s earnings, but the market is expected to turn around as the economy improves. Weak prices for butadiene, which is made from natural gas, have led to a shortage in recent months, which is leading to pent-up demand that could benefit the company.

One shareholder, Sandell Asset Management, a New York investment firm that owns 7 percent of TPC’s shares, accused management of orchestrating a sweetheart deal with a favored group of investors at a price that is “grossly suboptimal” for other investors.

At the time, the bid from First Reserve and SK Capital represented a premium, but since the deal was announced, TPC shares have traded above the offering price, indicating investors believed a higher bid would emerge.

Innospec, former Octel Corp., is a specialty chemicals company and the world’s only manufacturer of tetraethyl lead, an additive used primarily in fuel for small planes.

First Reserve and SK Capital previously declined to comment on whether they would increase their bid. Now, if they want to stay in the running, the next move is up to them.