To heck with Google!
The famous Internet search engine may have hogged recent financial headlines with its pricey initial public offering, but the bigger plastics-related move occurred Aug. 11, when Westlake Chemicals Corp. went public on the New York Stock Exchange.
Westlake now allows anyone eager to own a piece of the plastic resin, pipe and fence industries to do so with a single investment.
The Houston-based maker of PVC and polyethylene resin - which also owns PVC pipe maker North American Pipe Corp. and PVC fence maker Westech Fence Inc. - debuted with its stock selling for $14.50 per share. It had moved up to $15.30 in late trading Aug. 19 for a gain of almost 6 percent in its first seven trading days.
The Westlake IPO benefited from good timing, as it took place two days after the firm reported that its first-half sales were up 22 percent to $850 million vs. a year ago. Westlake's first-half profit almost tripled to more than $90 million.
First-half sales in Westlake's olefins business - including low density PE, ethylene and styrene monomer - were up 23 percent. Its vinyls business - including PVC resin, pipe and fence, as well as vinyl chloride monomer - grew 20 percent.
Olefins generated 62 percent of first-half sales, with vinyls bringing in the remainder.
Westlake officials attributed the solid performance to increased selling prices and sales volumes for most of its products. PVC resin prices are up about 23 percent, while prices for LDPE resin are up about 16 percent, according to the Plastics News resin pricing chart.
Westlake also stayed busy in the months leading up to its IPO. In July, the firm bought Bristolpipe Corp., an Elkhart, Ind.-based maker of PVC and ABS pipe, for $33 million in cash. Based on a recent Plastics News ranking, a combined North American Pipe/Bristolpipe entity would rank as North America's fourth-largest pipe, profile and tubing maker, with annual sales estimated at $470 million.
``Things have gone reasonably well so far this year,'' Westlake spokesman David Hansen said in an Aug. 19 telephone interview. ``Right now, we're focused on moving forward and improving shareholder value.''
Hansen added that the firm had hoped for an opening stock price of $16-$18 per share, but the IPO market softened in the weeks leading up to the debut.
Under terms of the IPO, Westlake hopes to net about $160 million. Hansen said most of those proceeds will go to pay off the firm's long-term debt, which was almost $510 million as of June 30.
In an Aug. 10 report, investment firm Renaissance Capital Corp. of Greenwich, Conn., said it had a positive outlook on Westlake.
``Petrochemical stocks have performed well lately,'' Renaissance said. ``Investor money has been flowing into companies such as Georgia Gulf, Nova Chemicals, Dow Chemical, Eastman Chemical, and Lyondell Chemical. The pros are bidding up these stocks, hoping to ride the predictable cyclical upturn in an otherwise shaky stock market.''
The Chao family, which founded Westlake in 1985, still holds more than 80 percent of Westlake stock. The Taiwanese family operates the Chao Group conglomerate and also owns a 45 percent stake in Malaysian petrochemical maker Titan Group.
Albert Chao will continue as Westlake's president and chief executive officer, while James Chao will remain its chairman.