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Celanese (CE) and Mitsui Form Food Ingredients Joint Venture
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Celanese Corporation (CE - Free Report) and Mitsui & Co., Ltd. have entered into a definitive agreement to form a food ingredients joint venture (JV) called Nutrinova. Per this agreement, Celanese will contribute its Food Ingredients business assets, technology, and employees to the JV and hold a 30% stake. Mitsui will acquire the remaining 70% stake for a purchase price of $472.5 million, which represents an enterprise valuation of around 15 times its 2022 EBITDA.
The transaction is expected to close in the second half of 2023, subject to regulatory approvals. The formation of the Nutrinova JV builds upon the existing strategic partnership between Celanese and Mitsui, combining Celanese's Food Ingredients business with Mitsui's positions across the food value chain in Asia and other regions. Celanese will also continue to supply the Nutrinova JV with acetyls raw materials under a long-term supply agreement.
This JV allows Celanese to monetize a significant portion of its Food Ingredients business in a value-enhancing manner while still benefiting from its integration with the Acetyl Chain. The net cash proceeds from the transaction, estimated to be around $450 million after accounting for closing expenses and transaction costs, will be used to reduce debt, aligning with Celanese's deleveraging plan.
Celanese's Food Ingredients business is a leading producer of acesulfame potassium (Ace-K) sweetener, sorbic acid and potassium sorbate preservatives. The business is known for its zero-calorie, high-intensity sweetener Sunett Ace-K. In 2022, the Food Ingredients business generated roughly $170 million in net sales on a pro-forma basis.
The company has lost 16% in the past year against the industry’s 4.7% rise in the same period.
Image Source: Zacks Investment Research
Celanese, in May, said that it sees adjusted earnings of around $2.50 per share for the second quarter of 2023. The projection includes the expected roughly 30 cents impact from the M&M amortization. It expects sequential earnings growth in its businesses.
Due to increased business performance and the timing of cash items, the company forecasts a considerable improvement in free cash flow in the second quarter.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating year-over-year growth of 112.5%. The company’s shares have gained around 5.4% over the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Gold Fieldscurrently carries a Zacks Rank #1.The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, implying year-over-year growth of 8.3%. Gold Fields’shares have rallied roughly 49.5% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 22.9% in the past year.
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Celanese (CE) and Mitsui Form Food Ingredients Joint Venture
Celanese Corporation (CE - Free Report) and Mitsui & Co., Ltd. have entered into a definitive agreement to form a food ingredients joint venture (JV) called Nutrinova. Per this agreement, Celanese will contribute its Food Ingredients business assets, technology, and employees to the JV and hold a 30% stake. Mitsui will acquire the remaining 70% stake for a purchase price of $472.5 million, which represents an enterprise valuation of around 15 times its 2022 EBITDA.
The transaction is expected to close in the second half of 2023, subject to regulatory approvals. The formation of the Nutrinova JV builds upon the existing strategic partnership between Celanese and Mitsui, combining Celanese's Food Ingredients business with Mitsui's positions across the food value chain in Asia and other regions. Celanese will also continue to supply the Nutrinova JV with acetyls raw materials under a long-term supply agreement.
This JV allows Celanese to monetize a significant portion of its Food Ingredients business in a value-enhancing manner while still benefiting from its integration with the Acetyl Chain. The net cash proceeds from the transaction, estimated to be around $450 million after accounting for closing expenses and transaction costs, will be used to reduce debt, aligning with Celanese's deleveraging plan.
Celanese's Food Ingredients business is a leading producer of acesulfame potassium (Ace-K) sweetener, sorbic acid and potassium sorbate preservatives. The business is known for its zero-calorie, high-intensity sweetener Sunett Ace-K. In 2022, the Food Ingredients business generated roughly $170 million in net sales on a pro-forma basis.
The company has lost 16% in the past year against the industry’s 4.7% rise in the same period.
Image Source: Zacks Investment Research
Celanese, in May, said that it sees adjusted earnings of around $2.50 per share for the second quarter of 2023. The projection includes the expected roughly 30 cents impact from the M&M amortization. It expects sequential earnings growth in its businesses.
Due to increased business performance and the timing of cash items, the company forecasts a considerable improvement in free cash flow in the second quarter.
Celanese Corporation Price and Consensus
Celanese Corporation price-consensus-chart | Celanese Corporation Quote
Zacks Rank & Key Picks
Celanese currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include L.B. Foster Company (FSTR - Free Report) , and Gold Fields Limited (GFI - Free Report) , carrying a Zacks Rank #1 (Strong Buy) each, and Linde Plc (LIN - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating year-over-year growth of 112.5%. The company’s shares have gained around 5.4% over the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Gold Fieldscurrently carries a Zacks Rank #1.The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, implying year-over-year growth of 8.3%. Gold Fields’shares have rallied roughly 49.5% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 22.9% in the past year.