March 5 (Reuters) - Chemical maker Ferro Corp said it would sell more assets that do not generate sufficient returns, a day after it rejected A. Schulman Inc’s $563 million buyout offer.
The company, which sells products used in industries such as electronics and construction, also said it plans to reduce operating costs by more than $50 million over the next two years.
The Mayfield Heights, Ohio-based company on Monday rebuffed Schulman’s offer, saying it was better off continuing its own strategy.
Analysts said Ferro could generate more value for shareholders if it sold the company in pieces. However, they don’t expect Tuesday’s announcement to lead to fire sales.
“I don’t think what they are saying today is an indication that these (asset sales) are imminent,” said Monness, Crespi, Hardt & Co analyst Christopher Shaw.
“They are just going to stress test all their assets and see which ones are not worth having anymore.”
In February, the company sold assets related to a shrinking business that made conductive pastes used in solar cells to a German company. Ferro disclosed on a call on Tuesday that it had received $11 million from the sale.
The company will consider bolt-on opportunities that will help it get into emerging markets or geographies and create shareholder value, interim Chief Executive Officer Peter Thomas said on the call.
Ferro’s fourth-quarter net loss widened to $64 million, or 74 cents per share, from $61 million, or 71 cents per share, as sales in its electronic materials business fell.
The unit reported a 22 percent fall in net sales due to lower demand for solar paste products and precious metal powders and flakes used in other electronics applications.
Net sales fell 8 percent to $406 million.
Ferro shares were down about a percent at $6.71 in early trade on the New York Stock Exchange on Tuesday. They rose 31 percent to close above Schulman’s offer of $6.50 per share on Monday.