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Chemical Companies Last Week: 'Tis the Season for Selling

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Chemical Companies Last Week: 'Tis the Season for Selling PART 1 OF 4

Albemarle Finishes Selling Chemetall to BASF

Albemarle finishes Chemetall sale

On December 14, 2016, Albemarle (ALB) announced the completion of the sale of its Chemetall surface treatment business to BASF. In June, Albemarle agreed to sell its Chemetall surface treatment business to BASF in a complete cash transaction valued at $3.2 billion. Albemarle wants to focus on its core business of lithium, bromine, and refining solutions.

Albemarle Finishes Selling Chemetall to BASF

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The company intends to use the proceeds from the sale to significantly reduce its debt. Albemarle has an outstanding long-term and short-term debt of ~$3.5 billion at the end of 3Q16. Albemarle intends to invest heavily in the remaining business for future growth. It also intends to return capital to shareholders.

The company already classified the revenue from Chemetall as “discontinued operations” in its 2Q16 earnings. The above graph clearly indicates the fall in Albemarle’s revenue in 2Q16 compared to 1Q16.

Albemarle’s stock price

As of December 16, 2016, Albemarle stock closed at $89.23 and lost 1.6% for the week. The company’s stock outperformed the Guggenheim S&P 500 Equal Weight Materials ETF (RTM). RTM fell 2.9% for the same period. Albemarle stock traded 7.60% above the 100-day moving average price of $82.90. On a year-to-date basis, the stock rose a staggering 59.30%. As of December 16, 2016, Albemarle traded ~94.90% above its 52-week low price of $45.78 and ~3.30% below its 52-week high price of $92.24.

Alternatively, investors can hold Albemarle indirectly by investing in RTM. It invests ~4.30% of its portfolio in Albemarle as of December 16, 2016—compared to 3.80% two weeks ago. The fund’s other top holdings include Nucor (NUE), Martin Marietta Materials (MLM), and FMC (FMC) with weights of 4.80%, 4.80%, and 4.60%, respectively.

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