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Univar (UNVR) to Buy Nexeo for $2 Billion, Boost Growth
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Univar Inc. has entered into a definitive agreement to buy global chemicals and plastics distributor, Nexeo Solutions, Inc, in a cash and stock deal valued at roughly $2 billion. Notably, the transaction includes the assumption of Nexeo’s debt and other obligations. Univar plans to finance the cash portion of the deal and refinance Nexeo’s existing debt with a combination of bank financing and available cash.
The combination is expected to drive growth and boost shareholders’ value with the largest sales force in North America along with extended product offering and most efficient supply chain network in the industry.
According to Univar, the transaction is expected to be accretive to cash flow and earnings starting in the first full year after the closure of the deal. It is expected to deliver $100 million or 43 cents per share (after-tax) of annual run rate cost savings by the third year following closure and reduce annual capital expenditures by $15 million immediately.
Per the deal, each share of Nexeo’s issued and outstanding stock will be converted into 0.305 shares of Univar common stock and $3.29 in cash, which is subject to adjustment at closing. This represents a purchase price of $11.65 on the basis of Univar’s close price of $27.40 as of Sep 14, 2018. Notably, the cash consideration is subject to a potential reduction of up to 41 cents on the basis of Univar’s stock price prior to the completion of the acquisition.
The deal is unanimously approved by the boards of the companies and is expected to close in the first half of 2019, subject to receipt of regulatory approvals and adherence to other customary conditions. Key stockholders of Nexeo, First Pacific and TPG, have also agreed to provide consent for the proposed deal.
Shares of Univar have gained 2.5% in the past three months compared with the industry’s 0.8% rise.
In second-quarter 2018, the company’s adjusted earnings rose 38.2% year over year to 47 cents while adjusted EBITDA increased 5.9%. For 2018, Univar sees adjusted earnings in the range of $1.65-$1.85, reflecting an increase from $1.39 in 2017. For the third quarter, the company expects adjusted EBITDA to grow by low double-digit clip year over year. Univar is expected to gain from its strategic initiatives, efficiency gains and prudent investments to drive growth.
Ingevity has an expected long-term earnings growth rate of 12%. Its shares have moved up 68.5% in the past year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 10.7% in the past year.
Trinseo has an expected long-term earnings growth rate of 12%. Its shares have returned 11.7% in a year.
5 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
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Univar (UNVR) to Buy Nexeo for $2 Billion, Boost Growth
Univar Inc. has entered into a definitive agreement to buy global chemicals and plastics distributor, Nexeo Solutions, Inc, in a cash and stock deal valued at roughly $2 billion. Notably, the transaction includes the assumption of Nexeo’s debt and other obligations. Univar plans to finance the cash portion of the deal and refinance Nexeo’s existing debt with a combination of bank financing and available cash.
The combination is expected to drive growth and boost shareholders’ value with the largest sales force in North America along with extended product offering and most efficient supply chain network in the industry.
According to Univar, the transaction is expected to be accretive to cash flow and earnings starting in the first full year after the closure of the deal. It is expected to deliver $100 million or 43 cents per share (after-tax) of annual run rate cost savings by the third year following closure and reduce annual capital expenditures by $15 million immediately.
Per the deal, each share of Nexeo’s issued and outstanding stock will be converted into 0.305 shares of Univar common stock and $3.29 in cash, which is subject to adjustment at closing. This represents a purchase price of $11.65 on the basis of Univar’s close price of $27.40 as of Sep 14, 2018. Notably, the cash consideration is subject to a potential reduction of up to 41 cents on the basis of Univar’s stock price prior to the completion of the acquisition.
The deal is unanimously approved by the boards of the companies and is expected to close in the first half of 2019, subject to receipt of regulatory approvals and adherence to other customary conditions. Key stockholders of Nexeo, First Pacific and TPG, have also agreed to provide consent for the proposed deal.
Shares of Univar have gained 2.5% in the past three months compared with the industry’s 0.8% rise.
In second-quarter 2018, the company’s adjusted earnings rose 38.2% year over year to 47 cents while adjusted EBITDA increased 5.9%. For 2018, Univar sees adjusted earnings in the range of $1.65-$1.85, reflecting an increase from $1.39 in 2017. For the third quarter, the company expects adjusted EBITDA to grow by low double-digit clip year over year. Univar is expected to gain from its strategic initiatives, efficiency gains and prudent investments to drive growth.
Zacks Rank & Stocks to Consider
Univar currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are Ingevity Corporation (NGVT - Free Report) , Celanese Corporation (CE - Free Report) and Trinseo S.A. (TSE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth rate of 12%. Its shares have moved up 68.5% in the past year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 10.7% in the past year.
Trinseo has an expected long-term earnings growth rate of 12%. Its shares have returned 11.7% in a year.
5 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.
Click to see them right now >>