Jefferies Reiterates Buy on WestRock (WRK) Following HH&B Divestiture Reports
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Jefferies reiterated a Buy rating and $62.00 price target on WestRock LLC (NYSE: WRK) following reports that the company received bids for the HH&B segment. Reuters reported the company has initiated the sale process for the Home, Health, & Beauty (HHB) segment, which generated $576 mil of sales and $110 mil of EBITDA in 2016. HH&B is reportedly being valued at 10x EV/EBITDA, which is inline with SEE, ATR, BMS, and largely consistent with our expectations.
Analyst Philip Ng commented, "Reuters reported WRK has received bids for the previously telegraphed sale of the HH&B segment, which could generate $1+ bil of cash proceeds and we do not anticipate meaningful tax leakage. While the divestiture will likely be modestly dilutive initially, if WRK elects to take a balanced approach in deploying the proceeds, mgmt. can unlock shareholder value by capitalizing on the "valuation arb" of the assets."
Shares of WestRock LLC closed at $50.27 yesterday.
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