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Chemical Finance Digest, Sept. 5-9

3:25 PM MDT | September 12, 2011 | By VINCENT VALK

Topping the headlines last week, Clariant has downgraded its full-year earnings guidance "due to unfavorable foreign exchange rate developments and a softening of the global economy." The company now expects full-year EBITDA margins to be between 12.8% and 13.2%, down about a percentage point from previous guidance.
 
In M&A news, Yara is reportedly in talks to acquire BASF's fertilizer assets. Analysts estimate the purchase price to be around $680 million.
 
In equity news, Ecolab's previously announced share buyback, which will go into effect once the Nalco acquisition closes, will be worth $1 billion. Innospec has also launched a share buyback, worth $40 million.

In debt news, Moody's downgraded Solvay's credit rating one notch to 'Baa1' following the $4.9 billion acquisition of Rhodia. "The downgrade of Solvay's ratings by one notch to Baa1 follows the re-investment of the capital proceeds from the sale in 2010 of the high-margin and relatively stable pharmaceutical operations into a relatively levered chemicals business with weaker profitability characteristics," Moody's says. The deal was funded with cash, however.

In other headlines, solar panel maker Solyndra has filed for Chapter 11 bankruptcy protection in the U.S. The firm, which received over $500 million in federal funding just two years ago, said it can't compete with heavily subsidized Chinese firms (which makes one wonder just how subsidized those Chinese firms are).
 
In macroeconomic news, jobs dominated the discussion last week in the wake of President Obama's unveiling a $447 billion job creation package. The bill, a mixture of tax cuts, infrastructure spending, and other measures, received mixed reviews from chemical industry leaders.
 
The reviews were, frankly, entirely predictable. Dow CEO Andrew Liveris – who gets along pretty well with the White House, for a business leader – liked the bill. ACC president and CEO Cal Dooley said something about shale gas. NPRA president Charles Drevna said that he doesn't like regulation.
 
Beyond the chemical industry, a blogger in The Economist notes that the U.S. president's capacity to create jobs is limited, at best. As we approach presidential election season, which will surely see any number of candidates touting their job-crating prowess, we ought to remember that no president can just push a button and create jobs.
 
The week ahead will see August's U.S. industrial production index released on Thursday. Consensus is for a slight 0.1% rise.
 



Comments (1) for Chemical Finance Digest, Sept. 5-9
1.
An interesting recent JV deal which has underlying implications for both the auto industry and the chemical industry was recently conducted between BASF-Daimler. The chemical industry appears to be highly coveted by those industries that directly profit from employing specialty materials.
One firm that has made waves in the Philadelphia region in acquisition and privatization of the PE industry is the middle-market firm Ennovance Capital.
Posted by Jason B on Tuesday, September 13, 2011 @ 07:14 AM










 
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