It's interesting that Eastman Chemical (NYSE:EMN), Eastman Kodak's discard, is going to be the company that survives as the more viable going concern. To management's credit, they seem to understand the value of defensible markets and the need to wall off and dispose of businesses in long-term decline. With the announced acquisition of Solutia (NYSE:SOA), Eastman Chemical is taking another important step towards being a diversified specialty chemical company.
Is Solutia the Solution?
Eastman is paying about $4.7 billion in total enterprise value for Solutia, or about nine times trailing EBITDA. That's not an especially cheap price, but it's not so unusual for a takeout of a quality specialty chemical name. When Berkshire Hathaway (NYSE:BRK.A) acquired Lubrizol, the premium it paid was only about 80% less even though that was a very different market at the time. (For related reading, see EBITDA: Challenging The Calculation.)
Read the full piece here:
http://stocks.investopedia.
No comments:
Post a Comment