South Korea’s Lotte Chemical Corp. made itself a formidable option for Atlanta-based Axiall Corp. engaged in a proxy battle with U.S. rival Westlake Chemical Corp. by offering favorable terms in pricing and other terms to buy out the polyvinyl chloride powerhouse.

The chemicals arm of Lotte Group said in a regulatory filing on Tuesday that it has submitted an acquisition proposal to Axiall on Friday to widen its chemical portfolio and secure stable demand for the ethylene cracker it will start to produce in Louisiana in a partnership with Axiall. Lotte did not disclose financial terms or other details. But sources close to the deal said Lotte has beat the offer by Westlake the board of Axiall had turned down in April. Axiall board voted down a second bid by its local rival that offered $23.35 ($14.00 in cash and 0.1967 of a Westlake share) to each share of Axiall that would come around $1.65 billion. Westlake is believed to have offered to assume the company’s debt worth $1.5 billion as well.

Lotte in the disclosure statement showed confidence in its bid, saying it has cash of over 2 trillion won, and would use its cash reserves as other financing means to complete the acquisition.

The two U.S. chemicals are engaged in public proxy contest after Westlake turned outright hostile after its numerous bids for Axiall were turned down, pledging to replace the Axiall board during shareholder’s meeting on June 17.

Axiall in releasing proxy materials to persuade its shareholders claimed Westlake bid was “opportunistic and inadequate” and was exploring “strategic alternatives” with a number of third parties to look for a deal and price that “fairly compensates” its shareholders and assures business synergies.

Axiall shares closed at $23.30 higher on Monday from previous close of $22.72 on the brightened prospects of a deal.

Lotte Chemical has kept an amicable relationship with Axiall, entering a $3 billion joint venture last year to build an ethane cracker plant with an annual capacity of 1 million metric tons and a monoethylene glycol (MEG) plant with an annual capacity of 700,000 tons in Louisiana. Lotte Chemical owns a combined 90 percent stake in both of the joint ventures. The ground breaking ceremony of the MEG plant will be held this month, and Lotte Group Chairman Shin Dong-bin and Lotte Chemical President Huh Soo-young are expected to attend.

Axiall, the North America’s largest vinyl building products manufacturer, has 4,800 employees and posted $3.4 billion in sales last year. It concentrates mainly on manufacturing of vinyl chloride products that accounts for 75 percent of its business portfolio and also has construction materials manufacturing business.

By Chung Wook and Kang Doo-soon

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