Harsco Corporation HSC announced on Jan 10 that it signed an agreement with KPS Capital Partners, LP to sell its IKG business. The divestment of the Houston-based business will likely fetch Harsco $85 million — comprising notes and cash.
The private equity firm KPS Capital Partners invests in industrial and manufacturing companies globally. Investments are primarily spread across capital equipment, luxury product, basic material, general manufacturing, branded customer, healthcare and automotive part industries. The firm’s assets under management totaled $11.5 billion as of Oct 15, 2019.
Discussion on Divestment
As noted, Harsco’s IKG is well-recognized for its superior-quality bar grating (both aluminum and steel), innovative solutions and expertise. Its products are mainly used in security, safety and industrial flowing applications. Based in Houston, TX, IKG has manufacturing facilities in Mexico and the United States. Also, IKG employs 350 people worldwide.
Subject to the receipt of approvals and fulfillment of closing conditions, Harsco anticipates closing the divestment in early 2020. It intends on using the cash proceeds (net) for repaying debts, while the notes, worth $40 million, will be paid gradually.
It is worth noting here that IKG was part of Harsco’s Industrial segment. The business divestment will allow Harsco to focus on high growth opportunities in the environmental solutions arena.
Actions Related to Harsco Industrial Segment
Harsco’s Industrial segment comprised Air-X-Changers, Patterson-Kelley and IKG businesses. In May 2019, the company announced an agreement to sell the Air-X-Changers business to Chart Industries, Inc. GTLS for $592 million in cash. Concurrently, Harsco communicated its intention to divest the other two businesses as well.
In July 2019, the company completed the divestment of its Air-X-Changers business, while it sold its Patterson-Kelley business to an affiliate of SPX Corporation SPXC for $60 million in cash.
Harsco will complete the full divestment of its Industrial segment with the completion of the IKG transaction.
Zacks Rank, Estimate Trend and Price Performance
With a market capitalization of $1.6 billion, Harsco currently carries a Zacks Rank #3 (Hold).
In the past three months, the company’s shares have gained 14.9% compared with the industry’s growth of 10.4%.
Meanwhile, the Zacks Consensus Estimate for its earnings has been unchanged at $1.41 for 2019 (results pending) and $1.55 for 2020 in the past 60 days. On a year-over-year basis, estimates suggest growth of 7.6% for 2019 and 9.9% for 2020.
Harsco Corporation Price and Consensus
Harsco Corporation price-consensus-chart | Harsco Corporation Quote
Stock That Warrants a Look
One better-ranked stock in the industry is W.W. Grainger, Inc GWW. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, bottom-line estimates for W.W. Grainger improved for the current year. Further, it delivered a positive earnings surprise of 1.94%, on average, in the last four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPX Corporation (SPXC) : Free Stock Analysis Report
Chart Industries, Inc. (GTLS) : Free Stock Analysis Report
Harsco Corporation (HSC) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research