FMC says that it has signed a definitive agreement to acquire crop protection company Cheminova (Harboøre, Denmark), for about 10.5 billion Danish kroner ($1.82 billion). Cheminova is a wholly owned subsidiary of Auriga Industries, which is listed on the Copenhagen Stock Exchange. FMC will fund the all-cash acquisition through a mixture of debt and existing cash reserves. The transaction is expected to close in early 2015 and will be accretive to adjusted earnings in the first full year following the acquisition, FMC says. Auriga had announced in June 2014 that it is reviewing its strategic options, but further details were not disclosed at the time.
FMC also says it will alter its previously announced separation plans by selling the company’s alkali chemicals, or soda ash, business, and retaining its lithium business as a separate segment. FMC said earlier this year that it plans to separate into two independent public companies by spinning off its lithium and soda ash businesses. “FMC is committed to its strong balance sheet and a sale of alkali chemicals will allow us to delever to a point that is appropriate for our business profile. Alkali chemicals is a well-run, highly profitable, and cash-generative business, and we are confident it will attract many interested buyers. We expect to complete this sale by mid-2015,” says FMC chairman and CEO Pierre Brondeau.
Cheminova, which was founded in 1938, develops, produces, and markets crop protection products, and 98% of sales are generated outside Denmark. In 2013, Cheminova posted sales of 6.6 billion Danish kroner. It employs over 2,200 people in 24 countries. FMC intends to continue to operate, after close, all of the manufacturing facilities currently operated by Cheminova. These include the active ingredient manufacturing facilities in Denmark and India and the formulation facilities in Australia, Denmark, Germany, India, Italy, and the UK.
“In FMC, we have found a great new owner and the perfect industrial match,” says Jens Due Olsen, chairman of the board of directors of Auriga as well as Cheminova. “FMC appreciates our manufacturing and formulation capabilities; our strong research, development, and registration base; and global organization. FMC brings the scale and financial strength necessary to develop a true world leader within crop protection.”
FMC operates in three segments—agricultural solutions, health and nutrition, and minerals. In 2013, FMC generated sales of about $3.9 billion. The company employs about 5,600 people worldwide.
“Cheminova is a company that we have long considered to be an attractive potential partner. It follows a similar strategic approach to FMC in applying technology to deliver solutions to its customers and has a highly complementary product portfolio and geographic footprint. This transaction will broaden our agricultural solutions portfolio and significantly strengthen our market access in key agricultural end markets. Cheminova’s direct market access in Europe combined with its strong position in Latin America will help bring greater balance to our business. Its technology will allow us to expand our position in existing crop segments and provide accelerated access to additional crops, such as cereals. It will also strengthen our offerings to existing customers, especially in sugarcane, soybeans, and cotton,” Brondeau says.
Cheminova brings complementary technologies in insecticides and herbicides, significantly enhances FMC’s fungicide portfolio, and adds a growing micronutrient business, FMC says. “Cheminova has a portfolio of more than 60 active ingredients; over 2,300 registrations; and a pipeline of active ingredients currently under development. It is the addition of this broad suite of technology that is particularly exciting to us, and we firmly expect to increase our pace of new product launches in the coming seasons as a direct result of adding Cheminova’s capabilities to ours,” Brondeau says.
FMC anticipates synergies through a combination of production and operating efficiency gains, as well as improved market access. FMC expects the transaction to be accretive to adjusted earnings in the first full year following completion of the acquisition. Goldman Sachs acted as financial advisor; and Wachtell, Lipton, Rosen & Katz acted as legal counsel to FMC in connection with the acquisition. Citigroup provided additional financial advice and committed debt facilities, FMC says.
By Deepti Ramesh
