U.S.-Based Chemical Co. FMC Corp to Split Business into Two Companies
Published By : 11 Mar 2014 | Published By : QYRESEARCH
FMC Corp, the American chemical manufacturing company has said that it plans to split its business into two separate companies. While one company would comprise its minerals business, the other would focus on its health, agriculture, and nutrition businesses.
This caused an 8% spike in the shares of FMC, taking them to a value of USD 83.94 at the NYSE morning trade, marking a life-time high for the shares of the company on Monday.
As the traditional operational areas of chemical companies are increasingly impacted by the volatility in markets, many of these are realigning their focus to specialty businesses and agriculture. This helps them reduce their dependence on business areas that are impacted by unpredictable commodity prices.
The CEO of FMC, Pierre Brondeau said that the company’s minerals business is cyclical in nature and over the last few years it demanded more attention and investment. He also said that the company had under-managed its mineral-centric business over 2013.
FMC Minerals outlook for 2014 seems positive now with a 7% expected growth in revenue, taking it to USD 1 billion. This business will mainly operate around the lithium and soda ash trade.
Given the uneven nature of economic recovery over the past few decades, the demand for soda ash has been cyclical. FMC makes soda ash for a myriad of industrial customers. The company has a fairly positive outlook for its lithium business. This business arm of the company manufactures chemicals that are used in making batteries for electric cars. According to Brondeau, a greater penetration of electric cars in the market will bode well for the company’s growth expectations.
The market capitalization of the company is currently USD 10.35 billion. As it splits its business, it would engage in tax-free share distribution to shareholders in the newly formed companies.