KMG Chemicals climbs on business acquisition
KMG Chemicals, Inc. (Nasdaq: KMGB) shares are climbing after the maker and distributor of specialty chemicals completed the purchase of Air Products & Chemicals, Inc.’s (NYSE: APD) high purity chemicals business.
“This acquisition is a perfect fit with our proven business model of acquiring mature, specialty chemicals,” CEO Neal Butler said in a statement. “Since signing the definitive agreement in October, we have laid the groundwork for a smooth integration of the HPPC business and have developed enormous respect for the 159 talented, experienced and dedicated HPPC employees who have now joined the KMG team.”
Butler said the acquisition will provide a jump in revenue but warned investors that transition and integration costs associated with the acquisition will lower earnings in 2008.
“Investors should not expect to see the same year-over-year earnings growth this year as occurred in fiscal 2007 due to the significant costs associated with transitioning and integrating this business,” Butler said. “The acquisition will contribute in a much more significant way in fiscal 2009, particularly post-integration.”
Air Products’ high purity chemicals business generated about $87 million in revenue during fiscal 2007. The business segment has production facilities in Italy and Colorado.
In morning trading, KMGB shares are up 3.46%, or $0.50, at $14.96. Over the last 52 weeks, shares have ranged from $9.25 to $28.25.
