UPDATE: Nuplex shares rise 3.9% on sale of ANZ units

UPDATE: Nuplex shares rise 3.9% on sale of ANZ units to CHAMP backed company

(Updates share price movement in lede, adds comment in third, fourth and fifth graph)

By Suze Metherell

Oct. 22 (BusinessDesk) - Shares of Nuplex Industries rose 3.9 percent after the specialty chemicals maker agreed to sell two of its Australasian units to a company backed by Champ Private Equity for A$127.5 million, using the funds to repay debt and possibly make a capital return.

Axieo, an investment vehicle of Sydney-based Champ, will buy Nuplex Masterbatch, the plastic additives business, and Nuplex Specialities, the distribution business, Auckland-based Nuplex said in a statement. Sam Bastounas, formerly Nuplex’s regional president of Australia and New Zealand and chief operating officer of its specialties unit, will be Axieo's chief executive.

The shares gained 12 cents in morning trade to $3.20, close to the three-month high of $3.22 it jumped to when the possible sale was first announced in late September. The stock is rated an average of 'buy' according to the consensus of six analysts surveyed by Reuters, with a median price target of $3.37.

"People are happy to see they managed to sell it," said Paul Harrison, head of equities at Salt Funds Management. "Whether it's a good price to sell it we will see."

The sale would dilute future earnings, and the company would need to explain the reason behind the sale in an investor teleconference this afternoon, Harrison said.

Nuplex has previously warned its earnings this financial year will be hurt as increased competition crimps margins at its ANZ resins and specialty chemicals businesses, diluting an improved performance from its European and Asian units. In August, the company posted a 18 percent gain in annual profit to $52.4 million, after twice lowering its guidance on increased competition in the Australian and New Zealand market.

‘‘The board was not actively seeking to divest these businesses, however they have become increasingly non-core to the company’s strategy as the resins business has continued to grow," said Nuplex chairman Peter Springford. "The offer delivers a premium for these two principally Australian and New Zealand focused businesses as stand-alone entities and the divestment is in line with Nuplex’s strategy to focus on the global resins business.”

The proceeds will be used to reduce debt. The transaction would have seen gearing as at June 30 reduce to 14.5 percent rather than the reported 31.1 percent, Nuplex said. It also flagged a potential return of capital to shareholders, as well as further investment emerging markets and research and development.

Axieo expects to offer all current Masterbatch and Specialities workers employment. The Australian and New Zealand sale will be completed before the end of the year, while changing ownership for its Masterbatch operations in Vietnam should be completed in the first-half of 2015.

(BusinessDesk)

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