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FMC is Latest Chemicals Company to Split Up

Stocks in this article: FMC DOW BAC GS

NEW YORK (The Deal) -- Chemicals firm FMC (FMC) said Monday it intends to split into two public companies, separating its healthcare and agriculture units from its lithium and minerals segment.

Philadelphia-based FMC said the split follows a four-year effort to reshape its businesses. The company has done some buying and selling during that period, in 2013 alone acquiring the fish oil businesses of Norway's Trygg Pharma Group for $345 million while divesting its peroxygens business to the private equity firm One Equity Partners for $200 million.

Company chairman and CEO Pierre Brondeau called the split "a natural progression of our strategy," saying the two entities will both be stronger on their own.

"We believe that creating two companies, each with its own publicly listed equity, will enable the management of each company to pursue its own strategy," Brondeau said. "This will give each company greater focus on the success factors that are most important to its business and allow the adoption of a capital structure that is appropriate to its business profile."

Post-split Brondeau will lead the agriculture and healthcare business. The CEO of the minerals unit has not yet been named. The agriculture unit is expected to generate about $3.35 billion in annual sales, sourcing ingredients to food and pharmaceutical products, as well as crop protection products for farmers.

The minerals business should generate about $1 billion in annual sales, specializing on alkali chemicals including soda ash, used by the glass, chemical processing and detergent industries, as well as lithium, which is used in batteries and for medical applications. FMC said the minerals operation is expected to generate strong cash flow and should "have the financial flexibility to pursue select investment opportunities."

The split is part of a broader trend of chemical firms rethinking their businesses and trying to focus on less commodity-dependent products.

Dow Chemical (DOW), which last month rejected a suggestion by activist investor Dan Loeb that it split in two, has retained advisers to explore separation options for units totaling $5 billion in annual sales. Meanwhile DuPont last October said it would spin off its $7 billion in sales performance chemicals unit to shareholders.

Bank of America Merrill Lynch  (BAC) and Goldman Sachs (GS) are acting as financial advisers to FMC on the split, with Wachtell, Lipton, Rosen & Katz serving as legal counsel.

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