) has put up another business for sale as part of its ongoing
efforts to switch focus to high-margin businesses. The
Delaware-based chemical giant has agreed to divest its glass
laminating solutions and vinyls business ("GLS/Vinyls") to
Japan-based synthetic and chemical fibers maker Kuraray for $543
million. The business is a part of DuPont's Packaging &
Industrial Polymers unit.
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GLS/Vinyls, which raked in revenues of over $500 million in 2012,
is a prominent supplier of polyvinyl butyral and ionomer sheets
for safety glass as well as vinyl acetate monomer and polyvinyl
alcohol products used in an array of architectural, automotive
and industrial applications. The business has roughly 600
employees with six manufacturing facilities across the U.S.,
Europe and Asia, serving over 350 customers globally.
DuPont's Packaging & Industrial Polymers unit offers
material-based solutions to packaging, safety glass and polymer
compounding industries. It makes an extensive range of adhesive,
barrier, peelable lidding and sealant resins.
The sale, which is subject to regulatory clearances, is expected
to consummate during first-half 2014. In addition to the purchase
price, Kuraray will also pay for the value of inventories. The
buyout will help Kuraray to fortify its vinyl acetate business
leveraging DuPont's technology, talented GLS/Vinyls team and
manufacturing and sales network.
The move reflects a part of DuPont's strategy to gradually shift
its focus to high growth businesses, including agriculture, in an
effort to cut its exposure to low-margin businesses.
DuPont's Board, last month, approved the spin off of its
struggling performance chemicals unit. The company, earlier this
year, sold its performance coatings business to equity firm
The Carlyle Group
) for $4.9 billion in cash.
DuPont's performance chemicals business was a weak spot in the
third quarter of 2013. Demand of titanium dioxide (TiO2), which
is used to give paint and other coatings a white hue, remains
weak, partly due to challenging economic conditions in Europe.
Lower TiO2 pricing hurt the results in the performance chemical
business in the third quarter.
On the other hand, DuPont is seeing strength in its agriculture
business, reflected by higher corn seeds and crop protection
sales. Despite higher input costs, the Agriculture segment saw
double-digit rise sales in the third quarter boosted by higher
volume and strong performance of the crop protection business,
aided by the company's acquisition of a majority stake in Pannar
Seed (Pty) Limited.
A strong start in the North American growing season is boosting
the agriculture business. DuPont is witnessing healthy demand for
its corn hybrids and expects continued strong growth in crop
protection driven by new products. The company has numerous new
products in its pipeline that are expected to create value for
its customers in the years ahead.
DuPont is a Zacks Rank #3 (Hold) stock.
Other companies in the chemical space worth considering include
Asahi Kasei Corp.
) with both holding a Zacks Rank #1 (Strong Buy).