Last fall both HUN and TROX bottomed around $14. At the time, I mentioned that TROX was a good speculation but didn't pull the trigger. Now TROX is trading north of $25 while HUN is still languishing in the teens. Still waiting to unload my third trip with HUN when it trades north of $20, if ever.
daffy: Well, I would have bailed out of HUN had I noticed the quick pop to $20.47. Then the Rockwood deal news came out which killed the rally. More leverage for a company that is already overextended?? Geesshhhhh!!!!!
Yeah... same basic conundrum. The news took a while to get reflected in the pummeling that took place late in the day.
The Good News? JPM and Key Bank both just put out Buy ratings at $25 (and $26?) which is certainly a first. Any purchase of add'l TiO2 - as I previously opined - has to be viewed from the standpoint of HUN (in this case) getting almost a monopoly in Europe, and with the sulfur method specifically. Also - it's a commodity, right? But price has firmed and the cycle bottomed at the beginning of 2013. So if HUN pulls the trigger, gets a good price ( which it should ), gets the approvals, and moves on, they will be in a sweet spot in the cycle.
They will also be Queens of TiO2. They will also go into debt to make this happen. They have to say the words "immediately accretive to earnings" for this to not get viewed as too much of a negative.
Nobody ever seems to like it when they do these things - it's like getting a great blast of fresh breeze in the America's Cup and then - almost immediately! - backwinding your sails.
Daffy.....now we know why HUN options were trading last week in anticipation of this Rockwood news. Traders are having a field day today with volatility. Hope this TIO2 transaction (if consummated) is on favorable terms to HUN. I worry a little about the added leverage, but then again not surprising given the history of the company. Hopefully the TIO2 market improves as anticipated by manufacturers.
Thesis is that HUN will combine two businesses into one making a more profitable, larger, more efficient entity with dominant market share. HUN will then spin off the new entity in an ipo. Big $s acoming for the patient shareholder?!