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Westlake (WLK) to Acquire Boral's Building Products Unit

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Westlake Chemical Corporation (WLK - Free Report) has announced that it has entered a definitive agreement with Boral Industries Inc., a subsidiary of Boral Limited. Per the agreement, the former will take over the latter’s North American building products business for $2.15 billion in an all-cash transaction.

The proposed transaction is expected to conclude in the second half of 2021, subject to the receipt of regulatory clearance as well as other customary closing conditions. Deutsche Bank Securities Inc. and Baker Botts L.L.P. are the respective financial and legal advisors to Westlake. BofA Securities and Alston & Bird are acting as the respective financial and legal advisors to Boral.

Westlake’s leading products along with Boral’s product line will create a robust business model with increased scales, product and geographical diversity, and growth prospects across the North American building products market.

Westlake anticipates the buyout to add to its earnings in the first completed year of integrated operations and also expects cost synergies of roughly $35 million per year.

The company noted that the joint product lines will broaden its reach in the housing-related products business in North America and it is optimistic about the tremendous growth opportunities that the combined business will bring forth.

Shares of Westlake have soared 71.2% in a year, outperforming the industry’s growth of 67.2%. Its earnings growth rate for the current year is pegged at around 341%.

Zacks Investment ResearchImage Source: Zacks Investment Research

In its last-quarter earnings call, the company said that it sees continued strong global demand in polyethylene, PVC and downstream building products on strong markets for the downstream uses of its products, including residential construction, packaging and healthcare. The company remains focused on operating its facilities safely and efficiently. It is also making disciplined investments and new product launches, lowering costs, and leveraging its current products and footprint, globally.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Olin Corporation (OLN - Free Report) , Univar Solutions Inc. (UNVR - Free Report) and Tronox Holdings PLC (TROX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has a projected earnings growth rate of 506.7% for the current year. The company’s shares have soared 273.6% in a year.

Univar has a projected earnings growth rate of 35.2% for the current year. The company’s shares have risen 50.3% in a year.

Tronox has a projected earnings growth rate of 242.9% for the current year. The company’s shares have jumped 174.9% in a year.

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