Celanese Corporation CE declared that it has entered into a Memorandum of Understanding (MoU) with Push Group Co., Ltd., to form a new joint venture aimed at manufacturing cellulose acetate-based specialty products, including high-quality plastics and films. Push Group, a fully-owned unit of Sichuan Wuliangye Group Co., Ltd., is based in Yibin, China.
While definitive terms of several ancillary agreements are pending negotiation, Celanese and Push Group have completed the negotiation of the joint venture deal, wherein they consented to extend the period of exclusivity related to the project formation. The execution of the joint venture agreement and certain other remaining ancillary documents is anticipated to occur before the end of Mar 2016, with the closure of the transaction subject to the receipt of regulatory approvals and third party consents.
Per the terms of the joint venture agreement, Push Group would provide some existing cellulose acetate-related assets, and Celanese would provide certain technology along with its operational knowledge and experience.
In October, Celanese released its third-quarter 2015 results. The company’s third-quarter adjusted earnings (excluding one-time items) of $1.50 per share fell 6.8% from $1.61 reported in the year-ago quarter. Earnings, however, topped the Zacks Consensus Estimate of $1.38. The results were aided by the company’s continued focus on opportunities to serve key markets as well as productivity initiatives.
Sales in the reported quarter were $1,413 million, down roughly 20.1% year over year. The top line also missed the Zacks Consensus Estimate of $1,548 million.
Celanese currently carries a Zacks Rank #2 (Buy).
Other favorably ranked stocks in the diversified chemical space include Stepan Company SCL, PPG Industries Inc. PPG and Innospec Inc. IOSP. All these stocks carry a Zacks Rank #2.
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