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Chemical Maker FMC to Split Into Two Public Companies

Monday, 10 Mar 2014 11:51 AM

Chemical manufacturer FMC Corp. said it would split into two companies, one comprising its minerals business and the other its agricultural solutions, health and nutrition businesses.

FMC's shares rose as much as 8 percent to a life-high of $83.94 in morning trade on the New York Stock Exchange on Monday.

Chemical companies, including Dow Chemical Co. and DuPont, are shifting their focus to agriculture and other specialty businesses to lower their reliance on businesses exposed to volatile swings in commodity prices.

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

"The minerals business is a more cyclical business, so we started to face the situation that we were trading more as a growth company but had on the side a cyclical business which was starting to require more investment and more attention to growth than in the past," FMC Corp. Chief Executive Pierre Brondeau said on a conference call with analysts on Monday.

FMC had under-managed the minerals business over the past year, Brondeau added.

Earnings at FMC Minerals, which will hold the company's soda ash and lithium businesses, are expected to rise 19 percent to $153 million, based on the midpoint of FMC's 2014 outlook. Revenue is expected to grow 7 percent to $1.0 billion.

Demand for soda ash, which FMC makes for a number of industrial customers, has been cyclical due to an uneven global economic recovery.

But FMC is upbeat about its lithium business, which makes chemicals used in electric car batteries.

"The largest upside to our growth expectation would come from the greater penetration and mix of electric vehicles," Brondeau said.

FMC, which has a market capitalization of $10.35 billion, said the split would be through a tax-free distribution of shares in the new companies to its shareholders.

Brondeau will lead the company holding FMC's agricultural solutions and health and nutrition businesses. A CEO for FMC Minerals will be named in the coming months, FMC said.

FMC's agricultural solutions business provides crop-protection products such as herbicides, fungicides and insecticides. The health and nutrition business makes natural colors for food, binders and coatings, among other products.

Earnings at this unit are expected to rise 15 percent to $815 million, based on the midpoint of FMC Corp.'s 2014 outlook. Revenue is expected to increase 16 percent to $3.35 billion.

Brondeau characterized the company's agriculture business, its largest unit by revenue, as "self-funding."

FMC said it expects to complete the separation in early 2015 and list the two companies on the New York Stock Exchange.

The company completed the sale of its peroxygens unit to investment firm One Equity Partners earlier this month.

FMC is being advised by Bank of America Merrill Lynch and Goldman Sachs. Wachtell, Lipton, Rosen & Katz is serving as its legal adviser.

FMC's shares have risen 27 percent in the past year.

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

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Chemical manufacturer FMC Corp. said it would split into two companies, one comprising its minerals business and the other its agricultural solutions, health and nutrition businesses.
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Monday, 10 Mar 2014 11:51 AM
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