Rockwood Holdings, Inc. (ROC): This Specialty Chemical Company Looks Good After Its Business Divestment

Another peer, Tronox Ltd (NYSE:TROX) is the most expensively valued among the three companies. It is trading at $19.40 per share, with the total market cap of around $2.2 billion. The market values Tronox at 10.4 times its trailing EBITDA.

In the first quarter, Tronox experienced as much as a 23% sequential rise in pigment volume, reaching the highest level since the third quarter 2011. Its pigment revenue was $288 million, while the adjusted EBITDA for the segment was -$37 million. The total revenue came in at $470 million for the quarter, 8% higher than the revenue of $434 million last year. Its adjusted EBITDA was $73 million, mainly due to the positive adjusted EBITDA of $157 million from the Mineral Sands segment.

Looking forward, the company reported that it would continue to expect the pigment market to recover, with the improvement of supply-demand fundamentals in the second half of 2013. The huge investment in feedstock supply would be needed to meet pigment demand growth in the period of 2014-2020.

My Foolish take

With the divestment of CeramTec, Rockwood will be more flexible in terms of debt reduction and cash return to shareholders. Moreover, more shareholder value would be unlocked via its sale of the titanium-dioxide business. I also like Huntsman with its global leading positions and the relatively low EBITDA multiple.

The article This Specialty Chemical Company Looks Good After Its Business Divestment originally appeared on Fool.com and is written by Anh HOANG.

Anh HOANG has no position in any stocks mentioned. The Motley Fool owns shares of Rockwood Holdings. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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