Specialty chemicals company
Westlake Chemical Corp.
) has agreed to buy Ismaning, Germany-based Vinnolit Holdings GmbH
and its subsidiaries from private equity firm Advent International
for €490 million (roughly $667 million).
Vinnolit is a leading producer of specialty polyvinyl chloride
(PVC) resins. The company, which generated €917 million (around
$1.2 billion) of revenues last year, has six production facilities
in Gendorf, Burghausen, Cologne, Knapsack and Schkopau in Germany
and Hillhouse in the UK with an aggregate annual capacity of
780,000 metric tons of PVC.
Vinnolit owns a world class R&D facility in Gendorf and
applications laboratory in Burghausen. Its products are used across
a vast spectrum of industrial and building product applications
including automotive sealants, cable sheathing, flooring, medical
applications, pipes, rigid film and technical coatings.
Westlake plans to finance the buyout using existing cash and credit
facilities. The acquisition, which is subject to regulatory
approvals and other closing conditions, is expected to consummate
in the third quarter of 2014.
The acquisition is a strategic fit for Westlake and is expected to
help it broaden its global chlorvinyl footprint. It will add key
specialty PVC products and technology to the company's
Westlake's shares were up 3.4% in the trading session following the
announcement. Its shares closed at $79.14 yesterday, gaining 2.9%.
The stock is up roughly 30% so far this year.
Westlake's profit surged roughly 28% to $158 million or $1.18 per
share in first-quarter 2014, reported on May 5. The improvement
came despite unfavorable impacts from higher propane costs, severe
winter weather conditions and the planned maintenance turnaround at
the company's Calvert City plants in the reported quarter.
Westlake benefited from increased sales volumes for polyethylene
and ethylene, higher selling prices for key products and
contributions from its specialty PVC pipe business (acquired in May
2013) in the quarter.
Westlake is a Zacks Rank #1 (Strong Buy) stock.
Other companies in the chemicals space with favorable Zacks Rank
A. Schulman, Inc.
International Flavors & Fragrances Inc.
). While A. Schulman carries a Zacks Rank #1 (Strong Buy), both
PolyOne and International Flavors & Fragrances hold a Zacks
Rank #2 (Buy).
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