GRA Soars on Takeover Speculation

W.R. Grace & Co (GRA) shares soared Wednesday after reports surfaced that BASF SE (BASFY) may be interested in acquiring the chemical manufacturer. Options also soared with just over 20,000 contracts trading hands, which is more than 13x the average daily volume of just 1,501 contracts. The majority of the contracts were focused on the 30 September ‘08 calls, which suggests that many are making a cheap $0.40 per share bet on a hefty takeover premium.

The Financial Times Deutschland reported that German BASF was looking for acquisitions in the United States, citing management and other sector sources. BASF is reportedly studying whether ot bid for W.R. Grace & Co. The news comes shortly after W.R. Grace reported a rise in second quarter, but noted inflationary pressures that caused some complications. The stock itself continues to trade in the middle of its 52-week range.

Similar to BASF and Dow Chemical, W.R. Grace & Co. is engaged in the production and sale of specialty chemicals and specialty materials. Recently, these companies have been forced to raise prices in order to counteract rising commodity prices. As a result, many of these chemical companies have seen slimmer margins and more difficult business. Any acquisitions may help lower the cost of inputs and assist in cross-marketing key products.

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