Westlake Chemical Corporation (WLK - Free Report) has made an exclusive binding offer to buy the global compounding solutions business, NAKAN, from Los Angeles-based private equity firm, OpenGate Capital. The company expects the transaction to close by early 2019, which is subject to regulatory approvals, completion of necessary employee consultation procedures and other customary closing conditions.
Per the terms of the offer (subject to exclusivity protection), Westlake Chemical will pay roughly $265 million in cash that is subject to adjustment. The binding offer was made by the company for permitting NAKAN to proceed with the consultation obligations with the French works councils before entering into a negotiated and mutually-binding purchase agreement.
NAKAN, headquartered in Reims, France, has production facilities located in Germany, China, Mexico, Japan, Vietnam and Spain. It also has world-class research facility in France and application laboratory in the United States. Its products are used in a variety of applications in the medical, automotive as well as building and construction industries. Notably, NAKAN generated revenues of about $300 million in the most recent 12 months period.
According to Westlake Chemical, the combination of NAKAN with the existing compounding business is an appropriate strategy, which will enable the company to broaden the compounding business globally as well as add important technology and specialty products to the current portfolio.
Westlake Chemical’s shares have lost 18.5% in the past three months compared with the industry’s decline of 8.1%.
Zacks Rank & Stocks to Consider
Westlake Chemical currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are Nucor Corporation (NUE - Free Report) , Huntsman Corporation (HUN - Free Report) and ArcelorMittal (MT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor has an expected long-term earnings growth rate of 12%. Its shares have gained 16.2% in the past year.
Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have moved up 4.2% in a year.
ArcelorMittal has an expected long-term earnings growth rate of 4.8%. Its shares have gained 28.6% in the past year.
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