Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Specialty chemicals maker Ashland Inc. (ASH - Snapshot Report) is reportedly in discussion with at least seven private equity firms regarding the divestiture of its Water Technologies business unit, according to sources referred by Reuters.  The transaction value of the deal could exceed $1.5 billion.

The private equity firms who are reportedly through to the second round of bidding for the water technologies business unit include Apollo Global Management LLC, Bain Capital LLC, TPG Capital LP, Onex Corp, Advent International Corp, and Rhone Group LLC.

Since late Jul 2013, Ashland’s Board had initiated a review of alternative opportunities for its Water Technologies business unit that would strategically fit the company’s commitment to boost shareholders’ value. The strategic options for the unit also included a potential sale. Citigroup, Inc. (C - Analyst Report) is assisting Ashland in this process.

Ashland completed that review recently and a formal decision to continue with the divestment of the unit is in place now. As of now, Ashland hopes to complete the sale by the first quarter of calendar 2014. The company plans to use the net proceeds from the sale to return capital to shareholders in the form of share repurchases.

The Water Technologies unit’s financial performance showed improvement both on annual and sequential basis in the most recent quarter. Sales from this segment increased 2% year over year and 1.4% sequentially to $441 million in the fourth quarter of fiscal 2013 (ended Sep 30, 2013). The increase is attributable to improved market segmentation, streamlined organizational structure; new product launches and better supply chain execution.

In addition to the decision to sell the Water Technologies business, Ashland also decided to sell its elastomers business that serves the North American replacement tire market. The sale of elastomers business strategically fits with the company’s well-established plan to divest non-core assets and reinvest in higher-margin, specialty chemical businesses where growth opportunities are strong.

Ashland currently carries a Zacks Rank #5 (Strong Sell).

Other companies in the chemical industry worth considering include Methanex Corp. (MEOH - Analyst Report) and Asahi Kasei Corp. (AHKSY). Both of them carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%