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Albemarle Selling Chemetall Unit to BASF for $3.2 Billion
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Specialty chemicals maker Albemarle (ALB - Free Report) has agreed to divest its Chemetall Surface Treatment unit to German chemical giant BASF in a cash transaction worth around $3.2 billion.
The Chemetall unit is a leading supplier of surface treatments for metal, plastic and glass substrates. The business was acquired by Albemarle in Jan 2015 as part of its $6.2 billion acquisition of Rockwood Holdings, Inc.
The deal, which is subject to regulatory clearances and other customary closing conditions, is expected to complete by end-2016. At closing, the value of the deal is subject to reduction for some underfunded and unfunded pension obligations and further adjustment for cash, indebtedness of the business, and variation, if any, of working capital vis-à-vis a targeted amount.
The sale is a part of Albemarle's sustained commitment to boost shareholder value by investing in the growth of its high priority businesses. BofA Merrill Lynch is acting as financial advisor to Albemarle while Shearman & Sterling LLP is acting as its legal advisor on the transaction.
Albemarle’s shares rose around 3.5% to close at $82.80 last Friday.
Albemarle saw its profits skyrocket in the first quarter of 2016, aided by sizable gains on sale of businesses. It logged profit of $228.2 million or $2.02 per share for the quarter, a more than five-fold surge from the year-ago profit of $43.1 million or 40 cents per share.
The Chemetall unit logged net sales of $208.2 million in the first quarter, up around 8% year over year, as unfavorable currency impact was more than offset by higher sales volumes and favorable pricing.
Albemarle, in its first-quarter call, said that it remains committed to deliver growth in its core businesses and increase free cash flows on a year over year basis in 2016. The company raised its guidance for 2016 based on strong first-quarter results and expectations for continued growth in most of its businesses.
Albemarle is selling non-core businesses and assets to boost growth opportunities and focus on its key businesses. The company, in Feb 2016, wrapped up the sale of its mineral flame retardants and specialty chemicals businesses to Huber Engineered Materials – a division of leading global manufacturer of flame retardant additives, J.M. Huber Corporation.
Also, in Jan 2016, Albemarle completed the divestiture of the tribotecc metal sulfides business to Treibacher Industrie AG, a leading player in the chemistry and metallurgy sectors. The divestment advances Albemarle's strategic plan of focusing on its core bromine, lithium, catalysts and surface treatment businesses.
Albemarle currently holds a Zacks Rank #1 (Strong Buy).
Other well-placed companies in the diversified chemical space include Axiall Corporation , Innospec Inc. (IOSP - Free Report) and Asahi Kasei Corporation (AHKSY - Free Report) , all carrying a Zacks Rank #1.
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Albemarle Selling Chemetall Unit to BASF for $3.2 Billion
Specialty chemicals maker Albemarle (ALB - Free Report) has agreed to divest its Chemetall Surface Treatment unit to German chemical giant BASF in a cash transaction worth around $3.2 billion.
The Chemetall unit is a leading supplier of surface treatments for metal, plastic and glass substrates. The business was acquired by Albemarle in Jan 2015 as part of its $6.2 billion acquisition of Rockwood Holdings, Inc.
The deal, which is subject to regulatory clearances and other customary closing conditions, is expected to complete by end-2016. At closing, the value of the deal is subject to reduction for some underfunded and unfunded pension obligations and further adjustment for cash, indebtedness of the business, and variation, if any, of working capital vis-à-vis a targeted amount.
The sale is a part of Albemarle's sustained commitment to boost shareholder value by investing in the growth of its high priority businesses. BofA Merrill Lynch is acting as financial advisor to Albemarle while Shearman & Sterling LLP is acting as its legal advisor on the transaction.
Albemarle’s shares rose around 3.5% to close at $82.80 last Friday.
ALBEMARLE CORP Price
ALBEMARLE CORP Price | ALBEMARLE CORP Quote
Albemarle saw its profits skyrocket in the first quarter of 2016, aided by sizable gains on sale of businesses. It logged profit of $228.2 million or $2.02 per share for the quarter, a more than five-fold surge from the year-ago profit of $43.1 million or 40 cents per share.
The Chemetall unit logged net sales of $208.2 million in the first quarter, up around 8% year over year, as unfavorable currency impact was more than offset by higher sales volumes and favorable pricing.
Albemarle, in its first-quarter call, said that it remains committed to deliver growth in its core businesses and increase free cash flows on a year over year basis in 2016. The company raised its guidance for 2016 based on strong first-quarter results and expectations for continued growth in most of its businesses.
Albemarle is selling non-core businesses and assets to boost growth opportunities and focus on its key businesses. The company, in Feb 2016, wrapped up the sale of its mineral flame retardants and specialty chemicals businesses to Huber Engineered Materials – a division of leading global manufacturer of flame retardant additives, J.M. Huber Corporation.
Also, in Jan 2016, Albemarle completed the divestiture of the tribotecc metal sulfides business to Treibacher Industrie AG, a leading player in the chemistry and metallurgy sectors. The divestment advances Albemarle's strategic plan of focusing on its core bromine, lithium, catalysts and surface treatment businesses.
Albemarle currently holds a Zacks Rank #1 (Strong Buy).
Other well-placed companies in the diversified chemical space include Axiall Corporation , Innospec Inc. (IOSP - Free Report) and Asahi Kasei Corporation (AHKSY - Free Report) , all carrying a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>