Dow Inc. DOW recently announced that it has inked a definitive agreement to sell certain U.S. Gulf Coast marine and terminal operations to Vopak Industrial Infrastructure Americas for $620 million. Notably, Vopak Industrial Infrastructure Americas is a joint venture between BlackRock's Global Energy & Power Infrastructure Fund and Royal Vopak.
The deal includes divestment of marine and storage terminal operations and assets at Dow’s sites in Plaquemine and St. Charles, LA, and Freeport, TX. Dow’s latest move demonstrates its focus on disciplined capital allocation strategy. Moreover, the transaction will enable the company deploy cash toward value-enhancing opportunities in core business areas as well as clearing additional debt.
In regards to this announcement, Dow and Vopak Industrial Infrastructure Americas have also inked long-term service agreements to ensure reliable and cost-saving services for existing Dow businesses at the in-scope sites. The deal is slated to close in fourth-quarter 2020, which is subject to customary closing conditions. Further, normal operations are likely to continue throughout the divestment process.
Dow is continuing to assess its ownership of non-revenue-generating assets across its global portfolio. It is also taking other actions to exit non-competitive assets.
Dow’s shares have lost 8% year to date compared with 1% decline recorded by the industry.
Zacks Rank & Key Picks
Dow currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Eldorado Gold Corporation EGO, Kirkland Lake Gold Ltd. KL and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. The company’s shares have surged 33% in the past year.
Kirkland Lake Gold has an expected earnings growth rate of 22.3% for 2020. Its shares have returned 3.7% in the past year.
Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 69.1% in the past year.
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