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Ashland to Sell Composites Unit & Marl BDO Facility for $1.1B
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Ashland Global Holdings Inc. (ASH - Free Report) said that it has agreed to divest its Composites unit and the butanediol (“BDO”) manufacturing facility in Marl, Germany, to London-based INEOS Enterprises in a deal worth around $1.1 billion. INEOS is among the world’s biggest manufacturers of chemicals and oil products with annual sales of $60 billion.
The Composites business is a global leader in unsaturated polyester resins, vinyl ester resins and gel coats. The Marl BDO facility and related merchant products included in the deal are part of Ashland’s Intermediates and Solvents division. These businesses have combined annual sales of more than $1.1 billion. Ashland stated that it will retain its BDO plant in Lima, OH, to ensure consistent supply for its internal needs.
The transaction, which is subject to regulatory approvals, completion of required employee information, consultation processes and standard closing conditions, is expected to close before the end of the June 2019 quarter. Citi is acting as financial advisor to Ashland while Squire Patton Boggs LLP is acting as legal advisor for the deal.
Ashland anticipates net proceeds of around $1 billion from the divestitures and expects to use that proceeds primarily for debt reduction. Before reporting its first-quarter fiscal 2019 results, the company plans to update its outlook for both the first quarter and fiscal 2019 to reflect the impact of moving these businesses to discontinued operations.
Ashland noted that the sale of these businesses is in sync with its goal of having a more streamlined and focused product portfolio that will reduce earnings volatility and improve margins. The company said that it will be better placed to deliver sustained earnings growth and create significant value for its shareholders.
Ashland’s shares are up around 15.7% so far this year, outperforming its industry’s 2.3% decline.
The company swung to a profit of $9 million or 15 cents per share in the fourth quarter of fiscal 2018 (ended Sep 30, 2018) from a loss of $58 million or 92 cents a year ago. Adjusted earnings of 97 cents per share fell shy of the Zacks Consensus Estimate of 98 cents. Sales for the quarter went up roughly 9% year over year to $956 million and topped the Zacks Consensus Estimate of $929.2 million.
Sales for the Composites unit rose roughly 8% year over year to $237 million driven by strong performance in North America during the quarter. The company’s Intermediates and Solvents segment raked in sales of $83 million in the quarter, up roughly 32% year over year.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have surged 58% in the past year.
CF Industries has expected long-term earnings growth rate of 6%. Its shares have rallied 31% in a year.
Methanex has expected long-term earnings growth rate of 15%. Its shares have gained 20% in the past year.
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And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Ashland to Sell Composites Unit & Marl BDO Facility for $1.1B
Ashland Global Holdings Inc. (ASH - Free Report) said that it has agreed to divest its Composites unit and the butanediol (“BDO”) manufacturing facility in Marl, Germany, to London-based INEOS Enterprises in a deal worth around $1.1 billion. INEOS is among the world’s biggest manufacturers of chemicals and oil products with annual sales of $60 billion.
The Composites business is a global leader in unsaturated polyester resins, vinyl ester resins and gel coats. The Marl BDO facility and related merchant products included in the deal are part of Ashland’s Intermediates and Solvents division. These businesses have combined annual sales of more than $1.1 billion. Ashland stated that it will retain its BDO plant in Lima, OH, to ensure consistent supply for its internal needs.
The transaction, which is subject to regulatory approvals, completion of required employee information, consultation processes and standard closing conditions, is expected to close before the end of the June 2019 quarter. Citi is acting as financial advisor to Ashland while Squire Patton Boggs LLP is acting as legal advisor for the deal.
Ashland anticipates net proceeds of around $1 billion from the divestitures and expects to use that proceeds primarily for debt reduction. Before reporting its first-quarter fiscal 2019 results, the company plans to update its outlook for both the first quarter and fiscal 2019 to reflect the impact of moving these businesses to discontinued operations.
Ashland noted that the sale of these businesses is in sync with its goal of having a more streamlined and focused product portfolio that will reduce earnings volatility and improve margins. The company said that it will be better placed to deliver sustained earnings growth and create significant value for its shareholders.
Ashland’s shares are up around 15.7% so far this year, outperforming its industry’s 2.3% decline.
The company swung to a profit of $9 million or 15 cents per share in the fourth quarter of fiscal 2018 (ended Sep 30, 2018) from a loss of $58 million or 92 cents a year ago. Adjusted earnings of 97 cents per share fell shy of the Zacks Consensus Estimate of 98 cents. Sales for the quarter went up roughly 9% year over year to $956 million and topped the Zacks Consensus Estimate of $929.2 million.
Sales for the Composites unit rose roughly 8% year over year to $237 million driven by strong performance in North America during the quarter. The company’s Intermediates and Solvents segment raked in sales of $83 million in the quarter, up roughly 32% year over year.
Ashland currently carries a Zacks Rank #2 (Buy).
Ashland Global Holdings Inc. Price and Consensus
Ashland Global Holdings Inc. price-consensus-chart | Ashland Global Holdings Inc. Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Methanex Corporation (MEOH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have surged 58% in the past year.
CF Industries has expected long-term earnings growth rate of 6%. Its shares have rallied 31% in a year.
Methanex has expected long-term earnings growth rate of 15%. Its shares have gained 20% in the past year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>