Flotek Industries Inc. (FTK) shares jumped more that 90% Friday after the Houston-based chemical and services provider for the oil and gas industry announced that it was selling its consumer and industrial chemistry technologies segment to Archer Daniels Midland Co. (ADM) .
Flotek will sell its Florida Chemical business to the global food processor for $175 million in cash.
In addition to Florida Chemical changing hands, the two companies also agreed to a long-term reciprocal supply agreement in which Flotek will continue to supply Florida Chemical with the flavoring agent D-limonene.
The two companies also agreed to explore opportunities to jointly develop next generation chemistry technology for the oil and gas and agricultural industries.
"We believe the benefits of this transaction are extremely compelling on multiple fronts and in the best interest of our stakeholders," Flotek CEO John Chisholm said. "Additionally, we are very excited about our long-term relationship with ADM to develop unique opportunities to more fully leverage their vast, high-performing portfolio of products to better serve the oil and gas market for many years to come."
The deal is expected to close in the first quarter of 2019. Archer Daniels Midland shares are down 1% on Friday.