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Olin (OLN), the second largest holding in my SLO, announced that it has an agreement to sell its Metals segment for 400 million. I am pleased because the Metals was a poor performer and I regard their Chlor Alkali business as the primary driver of profits. The price at approximately .20 x sales was not what I would have wished for, but I guess it is a confirmation that the Metals was not profitable.
OLN recently bought Pioneer (PONR), a Chlor Alkali competitor, for 348 million, which I thought was a very good buy. I think management has done a very good job, in effect they swapped out the Metals (a loser) and brought in more Chlor Alkali (a winner), gaining some cash and avoiding debt.
Updating my notes, this clarifies my valuation as I now know the Metals is worth 400 million, actually I had hoped it would be worth twice that. In any event, I now get a value of 32 per share for OLN, so, with the stock at 23.88, I will plan to hold.
Market response has been enthusiastic - the stock is up 5% today.
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