W.R. Grace’s acquisitions
On August 28, 2017, W.R. Grace (GRA) announced that it had entered a definitive agreement to acquire Evonik’s dental silica business. The deal includes the licenses to produce and sell Evonik’s SIDENT products. GRA also acquired J.M. Huber’s defoamer product series, which includes the worldwide sales rights for Zeofoam and Zeoflo products.
The financial terms of the acquisitions weren’t disclosed. Grace said that these acquisitions would not impact its fiscal 2017 revenue outlook. According to its July update, the company expects revenues to rise 3% to 4%, which suggests these deals could be closed in fiscal 2018. However, GRA didn’t provide information about that.
Sandra Wisniewski, president of the Materials Technologies segment, said, “Grace has long been a leader in both the supply of dental silicas and the supply of additives to a variety of industries. The precipitated silica products and technologies will enable Grace to deliver more value to our leading global consumer products customers with some of the world’s most recognized toothpaste brands. The defoamer precursors and anti-caking agents are a great addition to our strong silica product portfolio.”
Grace’s stock price movement for previous week
Grace stock had a positive week with the stock rising 1.5% for the week ended September 1, 2017. GRA stock closed at $72.26 and traded 3.0% above the 100-day moving average price of $70.14. On a year-to-date basis, the stock has returned 6.8%. However, analysts see further upside in the stock and have recommended a target price of $81.77, implying a return potential of 13.2% from the closing price of $72.26 as of September 1, 2017. GRA’s relative strength index of 67 suggests that the stock is neither oversold nor overbought.
Investors looking for indirect exposure in GRA can invest in the iShares U.S. Basic Materials ETF (IYM), which invests 0.80% of its portfolio in W.R. Grace. The fund rose 1.8% for the week and outperformed GRA. The fund also provides exposure to Air Products and Chemicals (APD), LyondellBasell (LYB), and PPG Industries (PPG), which have weights of 5.1%, 4.8%, and 4.3%, respectively, as of September 1, 2017.