Please ensure Javascript is enabled for purposes of website accessibility

Why Vertex Energy Stock Soared Wednesday

By Howard Smith - Jun 30, 2021 at 11:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is divesting a unit to bring in $140 million.

What happened

Houston-based specialty refiner Vertex Energy (VTNR -4.38%) announced last night that it has come to an agreement to divest its oil recycling division for $140 million. Investors cheered the news today, with Vertex shares gaining more than 35% early in the session. Shares have pared some of those gains, but remained up about 20% as of 11:05 a.m. EDT. 

So what

Vertex said it will sell its used motor oil collection and recycling business to Safety-Kleen, a division of environmental and industrial services company Clean Harbors (CLH -2.07%). The assets included in the agreement collectively generated $4.5 million in operating income in the first quarter of 2021, and will be sold to Safety-Kleen for $140 million in cash. 

used motor oil recycling bin.

Image source: Getty Images.

Now what

The divestiture isn't the only transformational move Vertex has made in the past month. Investors cheered when Vertex announced it will be buying a refinery in Alabama from Royal Dutch Shell. Shares have soared about 600% since that May 26 announcement. 

VTNR Chart

VTNR data by YCharts

The latest agreement includes used oil refineries in Louisiana and Ohio, as well as an oil collections business, an oil filters and absorbent materials recycling facility, and a marine terminal in Baytown, Texas. 

Management said in a statement proceeds from the asset sale to Safety-Kleen will be used to support higher-return energy transition assets including a renewable feedstock pre-treatment facility. 

Vertex president and CEO Benjamin P. Cowart said in a statement the transaction "will advance our strategy of becoming a leading pure-play energy transition company of scale." The companies expect to close the deal by the end of the third quarter of 2021. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vertex Energy, Inc. Stock Quote
Vertex Energy, Inc.
VTNR
$6.98 (-4.38%) $0.32
Clean Harbors, Inc. Stock Quote
Clean Harbors, Inc.
CLH
$116.33 (-2.07%) $-2.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.