DALLAS - Kronos Worldwide, Inc. (NYSE: NYSE:KRO) announced Monday that it has completed the acquisition of the remaining 50% joint venture interest in Louisiana Pigment Company, L.P. (LPC) from Venator Investments, Ltd. With this transaction, LPC becomes an indirect, wholly-owned subsidiary of Kronos.
The purchase was for an upfront cash payment of $185 million, subject to adjustments, and a potential earn-out of up to $15 million tied to LPC's future earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025 and 2026.
This strategic move is expected to enhance Kronos's product offerings and increase sales while realizing synergies in commercial, overhead, and supply chain operations. James M. Buch, Kronos's CEO, expressed optimism about leveraging process innovations to improve capacity and efficiency at LPC, which is considered the newest chloride-process titanium dioxide (TiO2) production facility in the Western world.
Kronos, which has been operating LPC in partnership with Venator Materials (OTC:VNTRF) or its predecessors since 1993, financed the deal with available cash and borrowings under its global revolving credit facility. The company will start reporting LPC as a wholly-owned subsidiary in its third quarter Form 10-Q filing.
Moreover, Kronos has amended its global revolving credit facility with Wells Fargo, increasing the maximum borrowing amount from $225 million to $300 million and extending the maturity date to 2029. The amended facility now includes LPC's receivables and certain inventories in the borrowing base.
In conjunction with these developments, Kronos's board of directors declared a quarterly dividend of $0.05 per share, payable on September 19, 2024, to stockholders of record as of September 6, 2024. This represents a reduction from the previous quarter's dividend. CEO Buch stated that the reduced dividend would help the company maintain a strong balance sheet and explore strategic investments while managing the increased financial commitments resulting from the LPC acquisition.
Kronos Worldwide, Inc. is a leading producer of titanium dioxide products with a significant international presence. The company's recent announcements are based on a press release statement and reflect management's current expectations and assumptions.
Still, they are subject to various risks and uncertainties that could cause actual results to differ materially. These include market conditions, supply and demand dynamics, integration of acquisitions, and global economic factors.
InvestingPro Insights
Kronos Worldwide, Inc. (NYSE: KRO) has recently fortified its market position by acquiring full ownership of Louisiana Pigment Company, L.P. (LPC), and the company's financial metrics and strategic moves reflect a potentially promising outlook. Here are some key insights from InvestingPro that might interest investors following this development:
InvestingPro Tips indicate that Kronos Worldwide is expected to see net income growth this year. This aligns with the company's optimistic vision for leveraging process innovations at LPC to improve capacity and efficiency. Kronos has been consistent in paying dividends to shareholders, having maintained dividend payments for 15 consecutive years, which underscores its commitment to shareholder returns.
From the data provided by InvestingPro, we see that Kronos has a market capitalization of $1540 million USD, emphasizing its substantial presence in the industry. The company's price-to-book ratio stands at 1.99 as of the last twelve months ending in Q1 2024, suggesting that the stock is potentially undervalued relative to its assets. Moreover, the significant return over the last week of 9.38% and over the last six months of 59.29% could indicate strong investor confidence following recent strategic decisions, including the LPC acquisition.
Investors looking for more in-depth analysis and additional InvestingPro Tips for Kronos Worldwide can explore the full range of insights by visiting https://www.investing.com/pro/KRO. There are currently 12 additional tips available that could provide a more comprehensive understanding of the company's financial health and market position. For those interested in an annual Pro or a biyearly Pro+ subscription, use the coupon code PRONEWS24 to get up to 10% off.
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