Nexeo Solutions Inc (NASDAQ: NXEO) is having an overwhelmingly strong start to the trading session this morning and for good reason. In news released yesterday after-hours, the company said that it would be acquired. Of course, the news excited investors, sending the stock on a run for the top. Today, we’ll talk about:
- The acquisition;
- what we’re seeing from NXEO as a result; and
- what we’ll be watching for with regard to the stock ahead.
NXEO To Be Acquired By UNVR
As mentioned above, Nexeo solutions is having a strong start to the trading session in the market today as news of an acquisition breaks. In a press release issued after-hours yesterday, the company said that it has entered into a definitive agreement under which Univar Inc. (UNVR), will acquire NXEO in a cash and stock transaction.
The transaction is valued at approximately $2 billion, which includes the assumption of debt and other obligations. The per share price of the acquisition comes to $11.65, which is subject to adjustment.
In a statement, David Jukes, President and CEO at UNVR, had the following to offer:
This transformational combination is designed to create the premier global chemical and ingredients distributor, with exciting opportunities for our customers, suppliers, employees and investors. Together, we will drive growth and shareholder value with the largest North American sales force in chemical and ingredients distribution, the broadest product offering, and most efficient supply chain network in the industry. We expect the transaction to be accretive to earnings and cash flow beginning in the first full year post closing and to generate $100 million of annual run rate cost savings by the third year following close and reduce annual capital expenditures by $15 million immediately.
By combining the best capabilities, talent, and resources from our two companies we will be even better equipped to deliver superior service and expanded value to our customers and supplier partners. We expect to leverage Univar’s leading e-commerce and digital capabilities across Nexeo’s financial systems and centralized ERP platform to accelerate the digital transformation already underway at Univar and reduce costs, while enhancing the ease of doing business. Our shared commitment to safety and innovation and our common organization structures provide a strong foundation for a smooth and successful integration.
The above statement was followed up by David Bradley, CEO at NXEO. Here’s what he had to offer:
We share Univar’s confidence in the future of our combined enterprise, given the strong strategic alignment across our business models, go-to-market strategies, superior product offerings, and digital capabilities. This combination represents a logical and compelling step forward, consistent with our focus on accelerating growth for the benefit of our customers, employees and suppliers. We are especially pleased that Nexeo’s employees are highly valued by Univar, and that our shareholders will be able to participate in the company’s future success through ongoing equity ownership.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Nexeo, the news proved to be overwhelmingly positive. With the company being acquired at a premium, shareholders will enjoy an immediate return of value. So, it comes as no surprise that investors are excited and sending the stock toward the top as a result. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:04), NXEO is trading at $11.21 per share after a gain of $1.20 per share or 11.99% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on NXEO. In particular, we’ll be watching the acquisition as it is still subject to customary closing conditions, regulatory approval, and adjustments in share price. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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