Rockwood to Control Sachtleben - Analyst Blog
February 19 2013 - 1:10PM
Zacks
Specialty chemicals company Rockwood Holdings
Inc. (ROC) has agreed to buy Kemira Oyj’s 39% stake in
their titanium dioxide (TiO2) joint venture “Sachtleben” for €97.5
million ($130 million). The transaction, which will provide
Rockwood full ownership of Sachtleben, is expected to complete by
Feb 19, 2013.
Sachtleben, a leading producer of high-quality TiO2, was formed in
Sep 2008 through the union of Rockwood’s TiO2 pigments and
functional additives business and Finland-based specialty chemicals
maker Kemira’s TiO2 business. Its major products include TiO2 in
anatase grade, TiO2 in rutile grade and titanium specialties.
Sachtleben caters to a bevy of industries including synthetic
fibers, plastics, paints, packaging inks, coatings, cosmetics and
pharmaceuticals. The entity, in July 2012, purchased specific
assets of German TiO2 producer crenox GmbH, bringing its total
capacity to roughly 340,000 metric tons.
The weak TiO2 market conditions appear to have triggered Kemira’s
decision to divest its interest in the joint venture. Weak
performance of Sachtleben led to a decline in its operating profit
in fourth-quarter 2012.
Rockwood is also contending with a deteriorating TiO2 market. Its
third-quarter 2012 profit (from continuing operation) fell roughly
19% year over year to $61.6 million or 77 cents per share on lower
sales. Revenues slipped roughly 8% year over year to $862.8
million, hurt by negative currency translation and weak demand in
the TiO2 business.
While the company recorded higher sales from its lithium business,
it saw declines across surface treatment, performance additives,
TiO2 pigments and advanced ceramics businesses.
Rockwood expects demand for TiO2 to remain soft in the fourth
quarter. However, it sees continued strength in its lithium
franchise.
Rockwood currently retains a short-term (1 to 3 months) Zacks Rank
#3 (Hold).
Other companies in the specialty chemicals space with favorable
Zacks Rank are American Pacific Corporation
(APFC), Novozymes A/S (NVZMY) and Penford
Corporation (PENX). All of them hold a Zacks Rank #1
(Strong Buy).
AMER PAC CORP (APFC): Free Stock Analysis Report
NOVOZYMES A/S (NVZMY): Get Free Report
PENFORD CORP (PENX): Free Stock Analysis Report
ROCKWOOD HLDGS (ROC): Free Stock Analysis Report
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