Air Products & Chemicals Inc.APD said that its intent to separate its Materials Technologies business through a tax-free spin-off to shareholders has been approved by its board of directors. The spin-off is expected to be complete before Sep 2016, on receiving regulatory approvals.
Following the spin-off, both Air Products and the Materials Technologies businesses will operate as two best-in-class public companies with separate business models, capital requirements and growth profiles. It will also provide shareholders the opportunity to have ownership in two leading companies. Air products, on the other hand, will value its Industrial Gases and Materials Technologies businesses independently.
The spin-off is in sync with Air Products' strategy and five-point plan. This will enable the company to become the safest and most profitable industrial gas company in the world, providing outstanding service to its customers. Also, it will allow the company to focus entirely on specialty materials.
Guillermo Novo, current executive vice president - Materials Technologies, will become Chief Executive Officer (CEO) of the new company post completion of the spin-off. Seifi Ghasemi will be the non-executive chairman of the new company, while retaining his current roles as chairman, president and CEO of Air Products.
The Materials Technologies division offers specialty gases, specialty chemicals, services and equipment to the electronics industry. It also offers performance chemical solutions for a number of industries including coatings, inks, adhesives, personal care, institutional and industrial cleaning, and mining.
Revenues from the Materials Technologies segment went up 3% year over year to $540 million in third-quarter fiscal 2015 (ended Jun 30, 2015). Underlying sales rose 7% on the back of 4% higher volumes and a 3% increase in pricing. However, these improvements were partly offset by unfavorable currency impact of 4%.
Air Products currently carries a Zacks Rank #2 (Buy).
Other favorably-ranked stocks in the chemical space include Koppers Holdings Inc. KOP , Arkema S.A. ARKAY and Akzo Nobel N.V. AKZOY . While Koppers sports a Zacks Rank #1 (Strong Buy), both Arkema and Akzo Nobel carry a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
