Specialty chemicals company
) has cut a definitive deal to divest its agrochemicals business
- Chemtura AgroSolutions - to Florida-based specialty chemicals
Platform Specialty Products Corporation
) for roughly $1 billion.
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The purchase consideration will be financed with $950 million in
cash and 2 million shares of Platform's stock. The deal, which is
subject to customary purchase price adjustments, regulatory
clearances and other closing conditions, is expected to
consummate in second-half 2014.
Chemtura's shares closed at $23.16 on Apr 17, losing around 8%.
The stock is down roughly 15% so far this year.
Chemtura AgroSolutions, which offers seed treatment and
agrochemical products for an array of crop applications, raked in
sales of $449 million and adjusted EBITDA of $101 million in
2013. Its product portfolio includes seed treatments,
insecticides, miticides, herbicides, fungicides and plant growth
Following the completion of the transaction, Chemtura's core
business will be focused on two segments - Industrial Performance
Products (IPP) that makes petroleum additives and urethanes, and
Industrial Engineered Products (IEP) that produces flame
retardants and brominated products, and organometallics. These
businesses are leaders in the respective markets they cater to
and are well placed for strong performance and future growth.
The sale of the agrochemicals business will enable Chemtura to
transform into a pure-play industrial specialty chemicals
company. The divestment will allow for greater management focus
on opportunities across IPP and IEP segments, each having
manufacturing, sales and distribution characteristics that
provide end-market synergies.
Chemtura spent $4 million in first-quarter 2014 on its
exploration activities related to the sale of the agrochemicals
business. The company generated net sales of around $1.8 billion
and adjusted EBITDA of $200 million on a pro-forma basis in
calendar year 2013.
Chemtura remains focused on expanding in faster growing economies
and markets to capture new product opportunities while
establishing appropriate value-based pricing levels for its
products. The company is emphasizing on managing costs and
improving operating efficiency.
Chemtura, in Dec 2013, completed the sale of its Consumer
Products business, including dedicated manufacturing plants in
the U.S. and South Africa, to KIK Custom Products Inc. for an
adjusted purchase price of $300 million. The sale is expected to
expand the company's margins to meet financial and strategic
Chemtura is a Zacks Rank #3 (Hold) stock.
Other companies in the specialty chemicals space with favorable
Zacks Rank include
Globe Specialty Metals, Inc.
Rockwood Holdings, Inc.
), both holding a Zacks Rank #2 (Buy).