Specialty chemicals company
Rockwood Holdings Inc.
) has agreed to buy Kemira Oyj's 39% stake in their titanium
dioxide (TiO2) joint venture "Sachtleben" for €97.5 million ($130
million). The transaction, which will provide Rockwood full
ownership of Sachtleben, is expected to complete by Feb 19, 2013.
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Sachtleben, a leading producer of high-quality TiO2, was formed
in Sep 2008 through the union of Rockwood's TiO2 pigments and
functional additives business and Finland-based specialty
chemicals maker Kemira's TiO2 business. Its major products
include TiO2 in anatase grade, TiO2 in rutile grade and titanium
Sachtleben caters to a bevy of industries including synthetic
fibers, plastics, paints, packaging inks, coatings, cosmetics and
pharmaceuticals. The entity, in July 2012, purchased specific
assets of German TiO2 producer crenox GmbH, bringing its total
capacity to roughly 340,000 metric tons.
The weak TiO2 market conditions appear to have triggered Kemira's
decision to divest its interest in the joint venture. Weak
performance of Sachtleben led to a decline in its operating
profit in fourth-quarter 2012.
Rockwood is also contending with a deteriorating TiO2 market. Its
third-quarter 2012 profit (from continuing operation) fell
roughly 19% year over year to $61.6 million or 77 cents per share
on lower sales. Revenues slipped roughly 8% year over year to
$862.8 million, hurt by negative currency translation and weak
demand in the TiO2 business.
While the company recorded higher sales from its lithium
business, it saw declines across surface treatment, performance
additives, TiO2 pigments and advanced ceramics businesses.
Rockwood expects demand for TiO2 to remain soft in the fourth
quarter. However, it sees continued strength in its lithium
Rockwood currently retains a short-term (1 to 3 months) Zacks
Rank #3 (Hold).
Other companies in the specialty chemicals space with favorable
Zacks Rank are
American Pacific Corporation
). All of them hold a Zacks Rank #1 (Strong Buy).