Please ensure Javascript is enabled for purposes of website accessibility

Why Kraton Stock Jumped Almost 10% Today

By Howard Smith – Sep 27, 2021 at 5:02PM

Key Points

  • Investors are realizing a nearly 50% premium versus when word came out that the company was seeking strategic alternatives.

Motley Fool Issues Rare “All In” Buy Alert

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 specialty polymer and bio-based chemical company is being acquired.

What happened

Shares of chemical and polymer company Kraton (KRA) jumped today on news it is being acquired, bringing investors what amounts to almost a triple over the last 12 months. The stock closed Monday's session up 9.4%.

So what 

Kraton announced today that it has entered into an agreement to be acquired by Korean chemical company DL Chemical in an all-cash transaction. The purchase price of $46.50 per share represents a nearly 50% premium compared to where the stock traded in early July 2021, when rumors began circulating of the potential for the company to be sold. The stock closed today's session just shy of the buyout price at $45.41 per share.

paperwork and calculator with the word buyout on top.

Image source: Getty Images.

Now what

The company said it has explored a wide range of strategic alternatives. CEO Kevin M. Fogarty said, "We believe DL Chemical has the industry presence and resources to continue to support the growth of Kraton's business on a global scale." 

Kraton's business is diversified across several geographic locations. Almost half of its business is in North America, as well as about 37% of sales in Europe and another 18% in what it refers to as the Europe, Middle East, and Africa region. 

Its products are used by general industry, with a focus on adhesive and packaging markets, as well as infrastructure uses that include additives for asphalt. At this point, there's nothing for investors to do other than plan for investing the proceeds from the sale. Though the three-year return on Kraton shares is negative, the stock has almost tripled over the past 12 months. Overall, that may be about the best outcome existing shareholders could hope for. 

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

Kraton Performance Polymers Stock Quote
Kraton Performance Polymers
KRA

*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
351%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

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.