FMC Corp (NYSE:FMC) Decides To Split Into Two Businesses

by Paul Wilson | Tuesday, Mar 11, 2014 | 720 views

Boston, MA, 03/11/2014 –FMC Corp (NYSE:FMC) announced on Monday that it will spin off its business into two separate companies, one will comprise of Agricultural Solutions and Health and Nutrition segments while the other will be dedicated to Minerals segment. The company’s share rose by over 6% following the split news.

Shifting Focus To Specialty Business

The Chemical maker proposed yesterday to split its steady and progressively growing agriculture, health and nutrition units from that of its cyclical minerals division. This comes in line with similar moves by other chemical companies like DuPont and Dow Chemical, who shifted their focus from a volatile mineral segment to other specialty businesses, which are more steady.

FMC Corp (NYSE:FMC) has a current market capitalization of nearly $10.35 billion and it said that the split, which is expected to complete in 2015, will be effected through tax-free shares distribution ofthe newly formed companies to its shareholders. Moreover, Brondeau will take the responsibility of the company’s agricultural and health and nutrition business, while a new leadership will be assigned with the responsibilities for minerals business. The company also confirmed that the two companies will list on the New York Stock Exchange. According to Eric Linser, From Avant-Garde Advisors, the split decision of the company is sensible and can create more value for its equity holders.

FMC Corp (NYSE:FMC)’s Chief Executive Officer, Pierre Brondeau said that they have been seeing an increased requirement of capital investment and time in the minerals division, which is subject to volatile prices during a portion of the year. Therefore, minerals business was not a center point of the company’s attention during the past one year.

Growth Aspect

FMC Corp (NYSE:FMC) is excessively optimistic about the growth prospects of its agricultural, nutrition and health solutions business, as they are looking to expand these units by $200-$400 million in the next one year. Moreover, these businesses are expected to fetch earnings of $815 million and revenues of $3.35 billion, as per the company’s 2014 outlook.

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