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Univar to Divest Environmental Sciences Business for $195M

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Univar Solutions Inc. UNVR announced a definitive deal under which its Environmental Sciences business will be acquired by affiliates of AEA Investors LP for $195 million.

Univar plans to use net proceeds from the sale to further pay down debt.

Per management, the transaction is expected to be a 'win-win' for Environmental Sciences’ dedicated employees, supplier partners and loyal customers. The transaction’s total economic benefit is expected to be enhanced by cost avoidance opportunities.

The transaction is slated to be closed by the end of 2019 or early 2020, subject to the receipt of regulatory clearances, and satisfaction of other customary closing terms and conditions. On completion of the transaction, the independent Environmental Sciences business will announce new name and brand identity.

Vice president of Environmental Sciences, Trace McEuen, will continue to lead the business under AEA's ownership.

Piper Jaffray & Co. and Stinson LLP are acting as the financial advisor and legal counselor, respectively, for Univar, in connection with the deal. 

Univar intends to continue focusing extensively on increasing the value of its core chemical distribution and ingredient business as well as realizing the maximum value from its integration with Nexeo Solutions.

Univar’s shares have gained 28.5% over a year against a 19.3% decline recorded by its industry.

 

 

In the last month, the company revised the adjusted EBITDA forecast for 2019, factoring in the lower-than-expected demand for chemicals and ingredients. Further, Univar expects adjusted EBITDA of $700-$725 million for the year compared with $725-$740 million mentioned earlier.

Moreover, the company expects adjusted EBITDA of $155-$180 million for the fourth quarter of 2019, suggesting rise from $144 million reported a year ago.

Univar Inc. Price and Consensus

 

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are General Moly, Inc GMO, Franco-Nevada Corporation (FNV - Free Report) and Agnico Eagle Mines Limited AEM, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Moly has an expected earnings growth rate of 12.5% for the current fiscal year. The company’s shares have gained 34% in the past year.

Franco-Nevada has a projected earnings growth rate of 45.3% for 2019. The company’s shares have rallied 36.3% in a year.

Agnico Eagle has an estimated earnings growth rate of 167.9% for the current year. Its shares have moved up 53.8% in the past year.

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