FMC Corp. (FMC) has executed unsecured credit deals worth $3.5 billion with lenders to facilitate its proposed takeover of Denmark-based Auriga Industries’ fully-owned unit – Cheminova A/S.
The Pennsylvania-based chemical maker inked the new credit agreements on Oct 10, 2014. A new term loan deal offers it up to $2 billion of senior unsecured loans that can be drawn to fund the Cheminova buyout, pay related fees and expenses, and support other transactions associated with the deal. The facility will have a termination date five years after it is drawn for the takeover.
FMC Corp. has also amended and extended the term of its $1.5 billion revolving credit pact which now expires on Oct 10, 2019.
FMC Corp., last month, landed a deal to purchase crop protection products maker Cheminova for $1.8 billion. The acquisition, which is subject to regulatory clearances, approval by Auriga’s shareholders and other closing conditions, is expected to close in early 2015.
The acquisition is a strategic fit for FMC Corp. as Cheminova has a highly complementary product portfolio and technologies as well as geographic footprint. Cheminova possesses a portfolio of over 60 active ingredients, more than 2,300 registrations and a pipeline of active ingredients currently under development.
The buyout is expected to bolster FMC Corp.'s core agriculture business and reinforce its access in major agricultural end markets. Cheminova’s technology will enable FMC Corp. to boost its foothold in crop segments while offering further access to additional crops including cereals. Cheminova’s complementary insecticide and herbicide technologies will expand the company’s fungicide portfolio.
The transaction is expected to be accretive to FMC Corp.’s adjusted earnings in the first full year following the acquisition. The company expects to realize synergies through production and operating efficiency gains and better market access.
FMC Corp., a Zacks Rank #4 (Sell) stock, will release its third-quarter 2014 results after the close on Oct 29.
Other chemical stocks worth considering include Valhi, Inc. (VHI), Minerals Technologies Inc. (MTX) and LyondellBasell Industries N.V. (LYB). While both Valhi and Minerals Technologies hold a Zacks Rank #1 (Strong Buy), LyondellBasell is a Zacks Rank #2 (Buy) stock.
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