Global manufacturer and distributor of chemical products Olin Corporation (NYSE: OLN) recently revealed that it has entered into a strategic partnership with Mitsui & Co., Ltd., a Japanese company with interests in product sales, logistics and financing.
Following the news, shares of the company rose 1.7% on Friday. The stock, however, pared its gains slightly to close at $53.17 in the extended trading session.
The joint venture aims at harnessing the strengths of Mitsui’s logistical capabilities and Olin’s production flexibility across the electrochemical unit (ECU) portfolio to buy, supply and market ECU-based derivatives.
The initial thrust of the venture will be on blue water caustic soda and ethylene dichloride (EDC), with potential future expansion into other ECU derivatives and related products.
Customers are expected to benefit from this alliance with greater security of supply, enhanced logistics reliability, heightened access to global product liquidity, and network optimization.
Management Commentary
The CEO of Olin, Scott Sutton, said, “Olin’s 130-year history in ECUs and Mitsui’s 70-year history in trading and logistics creates a natural partnership that will grow Olin’s parlay activities and grow Mitsui’s capacity to serve on a global scale.
“This innovative alliance will connect Olin’s leading asset positions with global product liquidity to reliably meet growing demand in increasingly sustainable ways. Through this alliance, Olin is committed to delivering strategic, sustainable solutions across the value chain.”
Stock Rating
On March 14, KeyBanc analyst Aleksey Yefremov upgraded the stock to Buy from Hold with a price target of $64, which implies upside potential of 20.4% from current levels.
Consensus among analysts is a Strong Buy based on 12 Buys and two Holds. OLN’s average price target of $75.23 implies upside potential of 41.5% from current levels. Shares have gained 34.2% over the past year.
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