“The acquisition of Supresta will boost Israel Chemicals’ flame retardant profile.”
ING is bullish on Israel Chemicals Ltd. (TASE: CHIM). Following the company’s acquisition of Supresta LLC, the investment bank reiterated its “Buy” recommendation for Israel Chemicals and upped its 12-month price target to NIS 39 from NIS 37.
ING says, “On 25 June, Israel Chemicals announced the acquisition of Supresta for $352 million in cash. Supresta is the world’s leading producer of phosphorus flame retardants with annual revenues of roughly $250 million in 2006. The transaction is expected to close late this summer pending anti-trust approvals in the US and Germany.
“The acquisition is expected to diversify Israel Chemical’s flame retardant offering, which accounts for the bulk of its industrial products division, which in turn accounted for 26% of 2006 revenue and 39% of earnings before interest and taxes (EBIT). We estimate this deal to add over $270 million in annual revenue and offer some top-line and bottom-line synergies. We are raising our target price to reflect the strategic merits of the acquisition coupled with increased bromine prices and subsiding currency pressures, partially offset by a rising risk free rate. We believe Israel Chemicals is paying a reasonable price of approximately 10 times 2007 forecast earnings before interest, taxes, depreciation and amortization (EBITDA), versus our 11.1 times 2007 forecast EBITDA estimate for Israel Chemicals.”
Published by Globes [online], Israel business news - www.globes.co.il - on June 27, 2007
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