Specialty polymer materials maker PolyOne Corporation (POL) announced that it will realign its North American manufacturing assets in relation to its acquisition of Spartech Corporation in Mar 2013. The step is in sync with the company’s strategy to integrate PolyOne and Spartech and increase its specialty transformation.
PolyOne plans to shut down six manufacturing plants and relocate production to other PolyOne facilities by the end of 2014. As a result of this, PolyOne expects to generate annualized pre-tax savings of roughly $25 million in 2015. The company expects to incur cash costs of about $45 million over the next 12-18 months, mainly related to severance, asset relocation and additional capital investment. These actions are also expected to reduce the headcount by about 250.
PolyOne expects to realize about $65 million of synergies from the Spartech acquisition and 50 cents of earnings per share accretion upon full synergy capture.
As a result of the realignment, PolyOne expects to take $35 million over the next 12-18 months which includes about $20 million related to cash charges and about $15 million related to non cash charges.
PolyOne has been taking strategic actions to realign its portfolio and recently sold its vinyl dispersion, blending and suspension resin assets to Mexichem, S.A.B. de C.V. for $250 million in cash. The sale included only those assets that were related to resin production including manufacturing plants in Pedrick town, N.J., Henry, Ill., and a resin research facility in Avon Lake, Ohio.
The divestiture of the base resin assets is consistent with PolyOne’s strategy of focusing on its core competence of material science formulation for specialty applications. This is in sync with the company’s improvement plan, which has delivered substantial shareholder value over the last five years.
PolyOne which is among the prominent players in the chemical-plastics industry along with Westlake Chemical Corp. (WLK), A. Schulman, Inc. (SHLM) and Tredegar Corp. (TG), is a leading provider of specialized polymer materials, services and solutions.
PolyOne currently retains a Zacks Rank #2 (Buy).
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