Citigroup raises Rohm and Haas, stock soars 11%

17 July 2007 18:26  [Source: ICIS news]

TORONTO (ICIS news)--Citigroup on Tuesday raised its price target for Rohm and Haas’ shares by 14.5%, citing Rohm's planned $2.00bn (€1.46bn) share buyback that will be financed to 50% by new debt.

 

The buyback and new debt ruled out big acquisitions and intensified pressure on Rohm to restructure its portfolio, thus making it a more focussed, higher-growth company, Citigroup said.

 

Citigroup raised its target by $8, to $63/share. The shares were up 11.68%, to $62.24, in early Tuesday afternoon trading in New York.

 

“Rohm is doing what private equity does to extract shareholder value – take on additional debt and create a tax shield on interest expense,” said Citigroup.

 

However, unlike private equity players, Rohm’s management was thinking long-term, Citigroup said.

 

Possible disposals Rohm might make include its powder coatings business, and the salt unit – which alone could fetch up to $700m - the analysts said.

 

($1 = €0.73)

By: Stefan Baumgarten
+1 713 525 2653

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