Cabot Taking Control of NHUMO in Mexico


Boston-based Cabot is getting bigger in Mexico.

On Monday, the specialty chemical company announced that it has agreed to buy out its Mexican joint venture partner, Grupo Kuo. Paying $80 million upfront, and $105 million in total, Cabot will acquire Kuo's 60% interest in the companies' NHUMO carbon black JV, taking full control of the venture.

Carbon black, more commonly known as "lamp black," is an amorphous carbon compound residue left behind from the incomplete combustion of heavy petroleum products. Its primary use is as a reinforcing filler ingredient in tires and other rubber products. In Mexico, NHUMO is the leading producer of the product, as Cabot is the leading producer of carbon black worldwide.

Announcing the deal, Cabot CEO Patrick Prevost noted that taking control of NHUMO "not only increases Cabot's footprint in North America, but solidifies our global leadership position in the carbon black industry."

Cabot further noted that the deal will add $0.15 per share to its fiscal 2014 earnings, exclusive of one-time costs. Further earnings gains on the order of $0.05 to $0.10 per share are expected to arrive "within the next two to three years."

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