FMC Corp. FMC has secured the U.S. antitrust approval for the earlier announced divestment of its alkali chemicals business to chemicals company – Tronox Limited TROX – for $1.64 billion. The company and Tronox expect to wrap up the transaction on Apr 1.
The alkali chemicals business is the biggest global producer of natural soda ash. Its products have applications in glass manufacturing, water treatment, pulp and paper, textiles, food and pharmaceutical and cosmetics.
BofA Merrill Lynch – a unit of Bank of America Corp. BAC – and Goldman Sachs GS are serving as FMC Corp.’s financial advisors for the transaction.
The sale of the alkali chemicals business will enable FMC Corp. to de-lever its balance sheet to an extent which is best fit for the company. It will also allow FMC Corp. to focus on high-growth agriculture and health and nutrition markets.
FMC Corp.’s shares slipped 0.9% to close at $64 on Mar 3.
FMC Corp., in March 2014, announced its plans to split itself into two independent public companies through the separation of its growth businesses – Agricultural Solutions and Health and Nutrition – from the cyclical Minerals division.
However, the company modified this separation plan in Sep 2014 and said that it is selling its alkali chemicals unit while retaining the lithium business. The company will keep its lithium unit as a separate operating segment.
FMC Corp. maintains a strategy of growth through acquisitions and strategic collaborations. The proposed acquisition of crop protection products maker – Cheminova A/S – for $1.8 billion, which is expected to close in first-quarter 2015, will boost the company’s agriculture business and reinforce its access in major agricultural end-use markets. The divestiture of the alkali chemicals unit will help FMC Corp. to reduce debt associated with the pending Cheminova acquisition.
FMC Corp. expects growth in its agricultural business to be supported by market share gains across Asia and Europe, the Middle East and Africa (EMEA) and new product introductions. Moreover, higher demand in health markets and expanding portfolio are expected to drive results in the company's health and nutrition franchise.
However, FMC Corp. faces operational challenges in Argentina, currency headwind and weak demand for certain products in China. Moreover, dry conditions in Brazil are hurting demand for the company’s products to sugarcane farmers.
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