PolyOne Selling Resin Assets for $250 Million
Avon Lake, Ohio-based PolyOne is selling its vinyl dispersion, blending, and suspension resin assets -- assets it describes as "non-core" -- to Mexico's Mexichem for $250 million cash, the company announced Monday. In a statement, PolyOne characterized today's announced sale as the final step in a process of divesting its "commodity equity investments" assets to focus instead on "the growth of our specialty offerings."
In fact, PolyOne gets better profit margins on its "commodity" business than some of its specialty products produce. But while this fact may call into question the company's decision to prefer one business over the other, it also seems to be helping PolyOne to secure an attractive price for the assets it's selling.
The assets in question belong (for the time being) to PolyOne's Performance Products and Solutions segment, which generated a 9% operating profit margin last year. (Some "specialty" businesses earned as little as 8.6%.) It also generated $147 million in revenues in 2012. Thus, the sales price values the assets being sold at about 1.7 times sales -- a valuation nearly twice the 0.75 price-to-sales ratio of PolyOne as a whole.
Good price notwithstanding, however, investors reacted negatively to PolyOne's news, sending the shares down 1.8% in Monday trading to close at $24.65.
The article PolyOne Selling Resin Assets for $250 Million originally appeared on Fool.com.Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.