Dahlman Rose Maintains a 'Buy' on Georgia Gulf Corp. (GGC); Raising Price Target on the Proposed Take-Out Offer
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Price: $54.58 --0%
Rating Summary:
3 Buy, 6 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
3 Buy, 6 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade GGC Now!
Dahlman Rose maintains a 'Buy' on Georgia Gulf Corp. (NYSE: GGC) price target raised from $35 to $45.
Dahlman analyst said, "The $30/share offer for GGC seems to be inadequate on a number of measures by our estimates, as does the level the shares have moved once the offer was made public. We would argue that the multiple for the offer now on the table values GGC using peak multiples when, in fact, the company is actually closer to trough in many of its businesses. We do not see the Board of GGC getting excited about a bid at this level or the current level of the share price. We also believe current major shareholders see value in a similar way. Finally, we would also argue that GGC is much less US housing dependent, with the significant increase in its export exposure for PVC and cumene. They are still housing dependent, just not only on US housing. Other markets like South America and Asia are growing more robustly than the US; hence, better trough earnings for the company."
"We do see the possibility of other bidders entering the market, including building products companies and foreign producers, especially out of Latin America, where a large proportion of US vinyl exports go. Although they may surprise us, we do not see Westlake Chemical (NYSE: WLK) moving past the $40 per share price level (if that)."
For an analyst ratings summary and ratings history on Georgia Gulf Corp. click here. For more ratings news on Georgia Gulf Corp. click here.
Shares of Georgia Gulf Corp. closed at $32.93 yesterday, with a 52 week range of $12.19-$40.59.
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Dahlman analyst said, "The $30/share offer for GGC seems to be inadequate on a number of measures by our estimates, as does the level the shares have moved once the offer was made public. We would argue that the multiple for the offer now on the table values GGC using peak multiples when, in fact, the company is actually closer to trough in many of its businesses. We do not see the Board of GGC getting excited about a bid at this level or the current level of the share price. We also believe current major shareholders see value in a similar way. Finally, we would also argue that GGC is much less US housing dependent, with the significant increase in its export exposure for PVC and cumene. They are still housing dependent, just not only on US housing. Other markets like South America and Asia are growing more robustly than the US; hence, better trough earnings for the company."
"We do see the possibility of other bidders entering the market, including building products companies and foreign producers, especially out of Latin America, where a large proportion of US vinyl exports go. Although they may surprise us, we do not see Westlake Chemical (NYSE: WLK) moving past the $40 per share price level (if that)."
For an analyst ratings summary and ratings history on Georgia Gulf Corp. click here. For more ratings news on Georgia Gulf Corp. click here.
Shares of Georgia Gulf Corp. closed at $32.93 yesterday, with a 52 week range of $12.19-$40.59.
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