Houston — Kraton Corp. is considering various initiatives to enhance shareholder value, including the possible sale of its Cariflex polyisoprene products business.
"The [Kraton] board of directors has initiated a process to review strategic alternatives for its Cariflex business, which may result in a sale of that business," the company said in a Feb. 19 news release.
Separately, the board also authorized a repurchase program for up to $50 million of Kraton's outstanding shares.
"We believe that the high-margin Cariflex business and its attractive growth prospects are not appropriately valued as part of Kraton," President and CEO Kevin Fogarty, said in a statement.
The company is focusing on enhancing its core businesses to drive value creation and strengthen its balance sheet, Fogarty said.
"We are extremely proud of our Cariflex franchise, developed and commercialized largely over the past 10 years by an extremely talented and dedicated global business team," he said. "Nevertheless, Cariflex is, for the most part, a stand-alone business at Kraton, with minimal revenue or cost overlap with our polymer and chemical segments.
"For this reason, we believe this segment could be a strong strategic fit with several players which are better positioned to realize valuable synergies associated with it and unlock its full value," Fogarty said.
According to the Kraton website, Cariflex polyisoprene products are ideal for applications such as medical goods that require extreme purity, comfort, exceptional protection and consistent high quality.
"These products are superior alternatives to natural rubber since it is free of the naturally occurring proteins and eliminates Type 1 allergic reactions which can occur through frequent exposure to (natural rubber)," Kraton said.
Meanwhile, Kraton's board has authorized the purchase of $50 million of Kraton's common stock by March 2021.
"The repurchase program may be suspended for periods or discontinued at any time, and the amount and timing of the repurchases are subject to a number of factors, including Kraton's stock price," the company said.
Kraton will release its fourth-quarter and full year financial results Feb. 27, and follow up the day after with a conference call to discuss those results.