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Chemical industry weekly news roundup, 18 July
9:43 AM MDT | July 18, 2014 | By LINDSAY FROST
This Week in CW:
Albemarle has reached an agreement to acquire Rockwood Holdings, a leading producer of lithium and surface treatment chemicals, for $6.2 billion. The deal gives Albemarle, a leading producer of catalysts and bromine-based derivatives, first or second position across four high-margin specialty chemical segments that are all growing at or faster than GDP, Albemarle says. “All four businesses have high margins, strong competitive positions, and attractive long-term growth,” says Albemarle president and CEO Luke Kissam. “The strong cash flows generated by these businesses will enable us to reduce leverage rapidly, support our ongoing dividend payments, and continue investing in the businesses to fuel growth and deliver increased value.” Kissam will lead the combined company. The transaction values Rockwood at $85.53/share, a 13% premium based on 14 July’s closing stock price.
Several companies began reporting second quarter earnings this week. Celanese (Dallas, TX) reports net earnings for the second quarter of $258 million, up 94% year-over-year from $133 million, on stronger pricing and volumes. Sales totaled $1.8 billion, up 7% YOY from $1.653 billion. Yara International (Oslo) reported strong second-quarter results, with improved European commodity margins due to lower gas price. Second-quarter net income after non-controlling interests was 2.29 billion Norwegian krone ($368 million) compared with NK 1.87 billion a year earlier. PPG Industries on 17 July reported second quarter net income from continuing operations up 24% year-on-year (YOY), to $393 million, or $2.80/share, on sales up 5%, to $4.1 billion. Adjusted earnings rose 24% YOY, to $2.83/share, ahead of analysts’ consensus estimate of $2.77/share, as reported by Thomson Reuters (New York). The company also named Michael McGarry, current executive v.p., as COO, effective 1 August.
Flint Hills Resources (Wichita, KS) has completed acquiring propylene-maker PetroLogistics (Houston). Flint Hills says the $2.1-billion transaction is its largest and first in the chemical space since the purchase of Huntsman’s US commodity chemical business in 2007. Flint Hills has merged a propylene subsidiary into PetroLogistics and will operate the propylene facility at Houston as part of its chemical and refining business. PetroLogistics will cease to be a publicly traded company.
Oman Oil Refineries and Petroleum Industries Co. (Orpic; Muscat) has awarded several technology provision contracts for its previously announced, $3.6-billion Liwa plastics project (LPP). The combined value of the technology packages has been put at $80 million. Under the terms of the deals, the licensors will provide technology for a natural gas liquids (NGLs) extraction facility; pyrolysis gas (pygas) hydrogenation unit; and methyl tert-butyl ether (MTBE), polypropylene (PP), and polyethylene (PE) plants.
Around the Web:
According to Reuters, US manufacturing output rose at its fastest pace in more than two years in the second quarter, suggesting the economy was regaining enough momentum to lift growth throughout the year. Other data on Wednesday showed inflation stirring at the factory gate and the housing market getting back on track after its recovery stalled late last year. Factory production increased at a 6.7% annual rate, the quickest pace since the first quarter of 2012, the Federal Reserve said. That was an acceleration from the January-March period's tepid 1.4% pace.
A New York Times opinion piece discusses helping big companies compete. Conservative organizations like Heritage Action for America and Americans for Prosperity have made killing the Export-Impot (Ex-Im) Bank their cause. And it has been taken up by Tea Party Republicans in the House, as well as Jeb Hensarling, the powerful chairman of the House Financial Services Committee. Although it is likely that the Senate will pass a reauthorization bill this month, if the House doesn’t follow suit by the end of September, the Ex-Im Bank will not be reauthorized. Companies that rely on the Ex-Im Bank’s array of financing products to complete deals will, unquestionably, be hurt.
Rutgers chemist researchers have developed a technology to produce clean-burning hydrogen fuel, according to Rutgers Today news. A new catalyst based on carbon nanotubes may rival cost-prohibitive platinum for reactions that split water into hydrogen and oxygen. The new technology is a novel catalyst that performs almost as well as cost-prohibitive platinum for so-called electrolysis reactions, which use electric currents to split water molecules into hydrogen and oxygen. The Rutgers technology is also far more efficient than less-expensive catalysts investigated to-date.