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Trinseo (TSE) to Divest Synthetic Rubber Unit to Synthos

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Trinseo S.A. (TSE - Free Report) has recently announced that it has landed an agreement to sell its Schkopau-based synthetic rubber business to Synthos S.A. and its associates. The transaction will be valued at around $491 million. The expected net cash proceeds are roughly $400 million after transaction-related costs and taxes. Deutsche Bank and Clifford Chance served as the respective financial and legal advisors to Trinseo on the transaction.

The transaction, subject to standard conditions and approvals, is expected to close in 2022. Roughly 440 employees are to join Synthos once the transaction closes. The deal also includes the transfer of the auxiliary operational, and research and development facilities and also related intellectual property.

The company believes that in its present agenda of pursuing its transformation strategy toward becoming a higher margin and sustainable solutions provider, the interest best lies in focusing on growth in Engineered Materials and CASE applications. Hence, the divestiture of Synthetic Rubber provides Trinseo with a more robust balance sheet and greater resilience to continue organic growth and acquisitions.

The company’s earnings growth rate for the current year is pegged at 323.9%. In the first quarter, it recorded adjusted earnings of $3.27 per share, reflecting a sharp increase from 26 cents a year ago and topping the Zacks Consensus Estimate of $2.42. The top line climbed around 28% year over year to $1,092.6 million.

Trinseo, which is a prominent player in the chemicals plastics space along with Westlake Chemical Corporation (WLK - Free Report) , Covestro AG (COVTY - Free Report) and Victrex PLC (VTXPF - Free Report) , anticipates net income in the range of $303-$343 million for 2021. Adjusted EBITDA is forecasted in a band of $625-$675 million.

The company expects results for the second quarter to be similar on a sequential basis due to the continuation of similar market trends that include strong demand and margins across many of its segments.

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