Pioneer Companies/Olin Corporation File Initial Proxy Statement

Pioneer Companies, Inc. (PONR) filed the initial proxy statement for its merger with Olin Corporation (OLN) with the SEC on July 2, 2007.

The proxy discloses that the HSR notification has been submitted with the FTC, but does not provide a specific filing date. It will be assumed that the filing was made during the last week of June, creating an approximate HSR expiration date of roughly July 27, 2007.

As discussed in the initial analysis on May 21, there are absolutely no antitrust issues in this combination, as both PONR and OLN are essentially second-tier players in the "chlor-alkali" filed behind Dow and Occidental. This merger will literally create more competition within the relevant markets, and therefore will be viewed favorable by the FTC. In short, early termination can be expected within the next few weeks.

The proxy also discloses lawsuits filed on behalf of OLN shareholders with respect to the merger transaction. The following details are provided:

On June 4, 2007, we were served with a petition naming us and members of our Board of Directors and Olin as defendants in a complaint filed in the District Court of Harris County, Texas, 129th Judicial District. The case is captioned Richard Denton, Derivatively on Behalf of Pioneer Companies, Inc. v. Michael Y. McGovern, Robert E. Allen, Marvin E. Lesser, Charles L. Mears, David A. Scholes. Richard L. Urbanowski and Olin Corporation, Defendants, and Pioneer Companies, Inc., Nominal Defendant, Cause No. 2007-32730.

This issue is only recognized as the shareholder dissent in this case has received an inordinate amount of publicity in recent weeks. This is somewhat odd for a transaction of this nature -- one in which the combination is very clearly a sound strategic move by both companies and where the exchange ratio is fair from both perspectives. It is unclear as to why this particular case has received so much attention in the press, but is it generally assumed that this may be the result of no other items of interest with respect to the transaction.

It is also assumed that the shareholder actions will result in absolutely no significant delays or stoppage for the transaction and will most likely result in the case being tossed out of court unceremoniously. Again, this situation is only being acknowledged because of the unusually high level of publicity surrounding the legal events.

The key timing factor remains the SEC proxy review. The somewhat delayed initial filing of the first proxy statement suggests that the companies are putting forth the effort to obtain an SEC review waiver, which has been viewed as a possibility since day one. If an SEC waiver is granted, the PONR shareholder meeting could be conceivably scheduled as early as the third week in August. If the SEC chooses to pull the proxy for review, the PONR shareholder meeting and close will be pushed back into September.

In either case, there continues to be no reason to expect the deal to close beyond the third quarter of this year.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.