NEW YORK (TheStreet) -- Cytec Industries (CYT) shares are up 26.55% to $73.89 on heavy volume in afternoon trading on Wednesday after the chemical company agreed to be acquired by rival Solvay for $5.5 billion.
Brussels-based Solvay will pay Cytec shareholders $75.25 per share, a 29% premium over the company's closing price yesterday.
The purchase makes Solvay the second biggest aerospace composite material manufacturer.
"This merger marks a major step toward Solvay's portfolio upgrade and enables us to strengthen our technology offerings to include advanced materials technology for the aerospace and automotive industries as well as integration of Cytec`s specialty chemical portfolio into our existing line of advanced formulations," said Solvay CEO Jean-Pierre Clamadieu.
The merger is expected to close in the fourth quarter this year.
TheStreet Ratings team rates CYTEC INDUSTRIES INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate CYTEC INDUSTRIES INC (CYT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $54.80 million or 24.54% when compared to the same quarter last year. In addition, CYTEC INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of -94.32%.
- 36.93% is the gross profit margin for CYTEC INDUSTRIES INC which we consider to be strong. Regardless of CYT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.76% trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.7%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- CYTEC INDUSTRIES INC's earnings per share declined by 9.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CYTEC INDUSTRIES INC reported lower earnings of $1.95 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($3.24 versus $1.95).
- You can view the full analysis from the report here: CYT Ratings Report