Univar Inc. UNVR said that it has completed the divestiture of the plastics distribution business of Nexeo Solutions (Nexeo Plastics) to an affiliate of One Rock Capital Partners, LLC for $640 million, subject to customary closing adjustments. Univar will use the net cash proceeds, worth roughly $615 million, to reduce its debt.
Nexeo Plastics is a global distributor of various plastics products and processors, including polymer products and engineering resins. Per Univar, this divestment enables it to focus on the core chemical distribution business and form significant value creation opportunities.
One Rock's profound knowledge of the plastics and distribution industries along with operational support should boost Nexeo Plastics' capabilities. Nexeo Plastics believes that its partnership with One Rock along with a new pure-play plastics distribution business structure will enable it to focus on expanding service offerings for suppliers and customers globally.
Univar's shares have lost 19% in the past year compared with the industry’s 10.4% decline.
Last month, the company provided an update on the 2019 view, reflecting the recently completed acquisition of Nexeo Solutions, which was closed on Mar 1, 2019.
For 2019, Univar expects adjusted EBITDA between $740 million and $760 million on a combined basis. The projected 10-month earnings from the Nexeo Chemicals business and realized synergies are worth roughly $10 million. The company expects to generate $300-$350 million in free cash flow, before one-time integration cost of around $70 million.
Zacks Rank & Key Picks
Univar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. KL, Ingevity Corporation NGVT and Materion Corporation MTRN, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 94.8% in the past year.
Ingevity has an expected earnings growth rate of 17.9% for the current year. The company’s shares have rallied 47.7% in a year’s time.
Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 12.5% in a year’s time.
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Univar Inc. (UNVR): Free Stock Analysis Report
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