Personal Finance
LYB

Why A. Schulman's Stock Is Rising Today

A closeup of a handshake superimposed over an industrial plant.

What happened

Shares of A. Schulman Inc. (NASDAQ: SHLM) rose sharply on Thursday and were up more than 11% at 10:45 a.m. EST after the plastics maker agreed to be acquired by LyondellBasell (NYSE: LYB) .

So what

LyondellBasell will pay a total of $2.25 billion to purchase A. Schulman. Under the terms of the agreement, LyondellBasell will hand over $42 per share in cash, as well as one contingent value right per share. Those rights will enable A. Schulman investors to potentially receive the net proceeds that the company might recover from the ongoing litigations and investigations relating to the acquisitions of Citadel Plastics and Lucent Polymers.

A closeup of a handshake superimposed over an industrial plant.

Image source: Getty Images.

The merger will create an industry-leading supplier of plastic compounds by doubling the size of LyondellBasell's existing compounding business. That increased scale leads the company to believe it can capture $150 million in annual cost synergies within two years, while the deal should be accretive to earnings within the first year.

Now what

With shares of A. Schulman currently trading above the $42 a share cash purchase price, there doesn't seem to be much upside left for investors. While there's always the possibility of another bidder swooping in with a higher offer, or the contingent value rights paying off, there's also a risk that the deal could fall through. Because of that, investors should at least consider cashing out and reinvesting their proceeds into a top dividend-paying chemicals stock or in one of February's top stocks to buy .

10 stocks we like better than A. Schulman

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and A. Schulman wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 5, 2018

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

LYB

Other Topics

Stocks

Latest Personal Finance Videos

How Student Loan Refinancing Works

Though it may be a great way to lower monthly payments, not everyone understands the student loan refinancing process. NerdWallet explains it. For more, try our refinance calculator: http://bit.ly/nerdwallet-student-loan-refinancing-calculator

Nov 25, 2019

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More