After a series of deals, Rockwood Holdings (ROC)
management now has the business it says it wanted. In agreeing to sell
the ceramics, clay-based additives, and pigments businesses, Rockwood is
not only about to be flush with cash, but a company highly focused on
and committed to its lithium and surface treatment businesses.
That's
perfectly fine with me, as I think there are solid reasons to expect
good growth in lithium demand and I believe Rockwood can put surplus
capital to work expanding the surface treatment operations through
select/precision acquisitions. What's not so fine with me is the
valuation. I get that many investors are enamored of what electric
vehicle adoption could mean for future lithium demand, but I'm not as
excited about an opportunity where I have to pay more than 10x EBITDA
just to get today's valuation on the shares.
Please read more here:
Rockwood Is Lean And Mean, But Not Overlooked
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