NEW YORK (TheStreet) -- Platform Specialty Products (PAH) - Get Report shares are up 1.99% to $25.64 in early market trading on Monday, after the American chemical company agreed to purchase British counterpart Alent for approximately $2.1 billion.
Alent shareholders will receive 503 pence per share in cash as part of the deal, a 49% premium over Alent's closing price on Friday.
Platform made the acquisition in an effort to bolster its performance applications business and compliment its MacDermid unit, which produces chemicals used in electronics, automotive, printing and offshore oil drilling industries, the company said.
"Alent is a strong complement to Platform's founding asset MacDermid, and I am excited to see it become a part of the Platform family. We have a long history with Alent and its predecessor company, and these are assets we know well. We believe the synergy potential is significant as is our combined ability to deliver better technology and service to our customers," Platform CEO Daniel Leever said in a statement.
Alent shares are higher by 43.17% on the London stock exchange.
Separately, TheStreet Ratings team rates PLATFORM SPECIALTY PRODUCTS as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PLATFORM SPECIALTY PRODUCTS (PAH) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 260.0% when compared to the same quarter one year ago, falling from -$7.42 million to -$26.70 million.
- Net operating cash flow has significantly decreased to -$70.05 million or 432.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for PLATFORM SPECIALTY PRODUCTS is rather high; currently it is at 54.45%. Regardless of PAH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PAH's net profit margin of -4.99% significantly underperformed when compared to the industry average.
- Even though the current debt-to-equity ratio is 1.36, it is still below the industry average, suggesting that this level of debt is acceptable within the Chemicals industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.35 is sturdy.
- PLATFORM SPECIALTY PRODUCTS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings ($1.21 versus -$1.58).
- You can view the full analysis from the report here: PAH Ratings Report