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Albemarle (ALB) to Sell Fine Chemistry Business to W.R. Grace

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Albemarle Corporation (ALB - Free Report) recently signed a definitive agreement with W.R. Grace & Co. to sell its Fine Chemistry Services business for roughly $570 million. The price consists of $300 million in cash and the issuance of preferred equity worth $270 million of a W.R. Grace & Co. Subsidiary to Albemarle.

As per the deal, Grace will acquire Albemarle’s operations in Tyrone, PA and South Haven, MI. The deal is subject to regulatory approvals and other customary closing conditions. The transaction is expected to be completed in the second quarter of 2021.

BofA Securities is playing the role of exclusive financial advisor to Albemarle and Troutman Pepper Hamilton Sanders LLP is serving as legal advisor.

The deal reflects Albemarle’s ongoing commitment to actively and continuously refine its portfolio with focus on its core, growth-oriented business segments. Fine Chemistry Services is a profitable business and the company believes that Grace can help it thrive.

Shares of Albemarle have surged 78.2% in the past year compared with 37.3% rally of the industry.

Albemarle expects its performance for full-year 2021 to increase modestly on a year-over-year basis on a sustained recovery in global economic activities.

The company expects net sales for 2021 between $3.2 billion and $3.3 billion. Moreover, adjusted EBITDA for the year has been projected in the range of $810-$860 million. Albemarle also sees adjusted earnings per share in the band of $3.25-$3.65 for 2021.

Albemarle also realized around $80 million of sustainable cost savings in 2020. It expects sustainable cost savings to reach a run-rate of more than $120 million by 2021.

 

Zacks Rank & Key Picks

Albemarle currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Fortescue Metals GroupLimited (FSUGY - Free Report) , BHP Group (BHP - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .

Fortescue has a projected earnings growth rate of 95.4% for the current fiscal. The company’s shares have surged around 186.3% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

BHP has an expected earnings growth rate of 69.2% for the current fiscal. The company’s shares have gained 75% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 186.9% for the current fiscal. The company’s shares have rallied around 108.6% in the past year. It currently carries a Zacks Rank #1.

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