Specialty chemicals company
Westlake Chemical Corporation
) entered into a definitive agreement with CertainTeed
Corporation to acquire its Pipe and Foundation Group ("PFG") for
about $175 million in cash, including $22 million of working
capital with closing adjustments. CertainTeed is a subsidiary of
the French public company Compagnie de Saint-Gobain.
PFG primarily produces PVC pipe and fittings for municipal, water
well, mining, agriculture and irrigation applications. Westlake
expects to complete the take over by the second quarter of 2013,
subject to customary regulations.
Pursuant to this buyout, Westlake will possess PFG's PVC pipe,
fittings, profiles and foundations businesses, as well as
associated operating facilities in Lodi, Calif and McPherson,
Kan, which has a production capacity of roughly 150 million
pounds per year.
In addition, Westlake will procure technologies and intellectual
properties for the production of a number of specialized
products, including Certa-Lok restrained joint pipe and Yelomine
branded products for a variety of end-market applications.
The acquisition is a strategic fit for Westlake as it is expected
to enhance the company's North American Pipe and building
products portfolio by adding specialty product lines and
supporting technology, which they do not possess presently.
Westlake, which is among the prominent chemical-plastics
companies along with
A. Schulman, Inc.
), reported a mixed fourth-quarter 2012 results last month.
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Westlake's adjusted earnings of $1.42 a share in the quarter
compared with 40 cents earned in the year-ago quarter. Earnings
surpassed the Zacks Consensus Estimate of $1.25 a share,
reflecting a positive surprise of around 14%.
Revenues came in at $801 million in the quarter, down 6.7% from
$859 million recorded in the year-ago quarter, missing the Zacks
Consensus Estimate of $832 million. The results impacted by lower
sales volumes for feedstocks, polyethylene and styrene, partially
offset by higher prices for styrene and higher building products
Westlake's Olefins saw higher profits on a year-over-year basis
in the quarter, aided by lower feedstock (ethane and propane)
costs, partially offset by unrealized loss in the trading
activity. The Vinyls segment of Westlake also saw higher profits
on a year-over-year basis in the quarter owing to lower feedstock
costs and higher caustic and building products sales volumes.
Westlake currently maintains a Zacks Rank #1 (Strong Buy).