OM To Sell Part Of Business For At Least $325M
CLEVELAND (AP) â¿¿ Specialty chemicals maker OM Group Inc. said late Monday that it reached a deal to sell the downstream portion of its advanced materials business to a new joint venture for at least $325 million.
The deal includes an initial cash payment of $325 million and potential future payments of up to an additional $110 million, if the business meets certain targets over the next three years. The joint venture is expected to include Freeport-McMoRan Copper & Gold Inc., Lundin Mining Corp. and La Generale des Carrieres et des Mines.
Investors approved of the move and OM Group shares jumped 11 percent in Tuesday morning trading.
The sale, which remains subject to regulatory approval, is expected to close before the end of April.OM Group said that the sale, which includes its cobalt refinery assets in Finland, is the final step in exiting its legacy commodity businesses and is in line with its strategy to shift toward technology-based businesses with attractive growth prospects and more predictable profits. After the sale closes, the Cleveland-based company said it expects to have total cash on-hand of over $500 million, which it will use to repay a substantial part of its debt and buyback up to $50 million of its shares. In connection with the sale, OM Group said that its board approved the repurchase of up to $50 million of the company's common stock. Based on Friday's closing stock price, the authorization represents about 7 percent of the company's current outstanding shares. OM Group also warned Monday that market conditions became tougher-than-expected throughout the fourth quarter, especially in Europe and in global consumer electronics markets, and that those conditions continued into 2013. As a result, the company said it's putting into place a wide variety of cost cuts designed to boost its near-term financial performance and better position the company for when economic conditions begin to improve.
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