FMC Jumps After Acquiring DuPont Assets, Lithium Unit Spinoff Plans

Shared of diversified chemical company FMC Corporation (FMC) are soaring after DuPont (DD) announced earlier it will be acquiring substantially all of FMC's Health & Nutrition business and divesting part of its Crop Protection business to FMC. FMC operates in three business segments: FMC Agricultural Solutions, FMC Health and Nutrition, and FMC Lithium.

WHAT'S NEW: DuPont said this morning it will acquire substantially all of FMC's Health & Nutrition business and divest part of its Crop Protection business to FMC. The divestiture will satisfy DuPont's commitments to the European Commission in connection with its conditional regulatory clearance of the proposed merger with Dow Chemical (DOW). Under the terms of the agreement, FMC will acquire DuPont's Cereal Broadleaf Herbicides and Chewing Insecticides portfolios, including Rynaxypyr, Cyazypyr and Indoxacarb. In addition, FMC will acquire the DuPont Crop Protection research and development pipeline and organization, excluding seed treatment, nematicides and late-stage R&D programs, which DuPont will continue to develop and bring to market, and excluding personnel needed to support marketed products and R&D programs that will remain with DuPont. The assets being divested generated revenues of about $1.4B in 2016.

IMMEDIATELY ACCRETIVE: FMC will make a cash payment of $1.2B to DuPont and sees the deal as being "immediately accretive" to earnings per share when it closes in the fourth quarter of 2017. FMC expects this acquired business will generate approximately $1.5B in revenue and $475M of EBITDA. According to FMC, the deal will make FMC Agricultural Solutions the fifth largest crop protection chemical company in the world by revenue, with estimated annual revenue of approximately $3.8B.

LITHIUM UNIT SPINOFF: According to Bloomberg, FMC CEO Pierre Brondeau said that the company will eventually spin off its lithium unit as publicly-traded company, but added that he doesn't expect to make an announcement on the matter prior to the end of 2018.

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Disclosure: None.

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