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DowDuPont's Unit to Sell Alginates Business to JRS Group

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DowDuPont Inc.’s (DWDP - Free Report) business unit, DuPont Nutrition & Health (N&H) has secured the green signal from the European Commission (EC) to divest its heritage DuPont N&H Alginates business to JRS Group that makes functional additives from plant-based raw materials.

The transaction, which is expected to close in third-quarter 2018, includes the heritage DuPont N&H Alginates business, comprising pure and buffered alginates, a specific portfolio of pectin-alginate blends, the associated Landerneau production site and customer relationships.

The divestment was a requirement set out by the EC upon its conditional clearance of DuPont’s buyout of FMC Corp’s Health & Nutrition business last year.

DowDuPont has underperformed the industry it belongs to over a year. The company’s shares have gained around 3.2% over this period, compared with roughly 12% growth recorded by the industry.

The company, during its first-quarter 2018 call, noted that it has realized cost-synergy savings of more than $300 million in the first quarter and is on track to deliver a 75% run rate against its $3.3 billion cost synergy target by the end of third-quarter 2018. It also returned around $2 billion to shareholders in the first quarter through dividends and share repurchases.

DowDuPont expects net sales in the second quarter to increase more than 10% and operating EBITDA to rise more than 20% on a year-over-year basis.

DowDuPont remains committed to achieve the cost-synergy target, execute its growth projects and deliver new products from its innovation pipeline. The company also expects the Materials Science business spin-off to complete by the end of first-quarter 2019, followed by the separation of Agriculture and Specialty Products businesses by Jun 1, 2019.

Zacks Rank & Stocks to Consider

DowDuPont is a Zacks Rank #3 (Hold) stock

Some better-ranked companies in the basic materials space are FMC Corp. (FMC - Free Report) , Celanese Corp. (CE - Free Report) and The Chemours Company (CC - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corp has an expected long-term earnings growth rate of 16.4%. Its shares have gained around 19.6% over a year.

Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have moved up around 31.8% over a year.

Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained around 20.3% over a year.

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