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Chemical Maker FMC To Split In Two

Business: Firm to divide into separate crop chemicals and minerals companies

by Marc S. Reisch
March 17, 2014 | A version of this story appeared in Volume 92, Issue 11

Taking a tack activist investors have been advocating for chemical companies, FMC Corp. plans to split into two independent firms in early 2015. The separate entities will each have a greater chance of success, the company says.

FMC through the years


1883: Founded as Bean Spray Pump Co.

1928: Changes name to FMC

2001: Splits into FMC (chemicals) and FMC Technologies (machinery)

2014: Sells peroxygens business PeroxyChem

Announces plan to split into FMC (crop protection, health, nutrition) and FMC Minerals (soda ash, lithium chemicals)

The new FMC will focus on the current firm’s fast-growing agriculture and health and nutrition segments, which had $2.9 billion in sales last year. FMC Minerals will focus on a slow-growing alkali chemicals business and on a small but growing lithium business; these units had sales of $970 million.

The decision to separate the businesses “is a natural progression of our strategy,” says CEO Pierre Brondeau, who will remain with the new FMC. Creating two independent, publicly listed firms “will enable the management of each company to pursue its own strategy,” he adds.

FMC is no stranger to portfolio realignments. In 2001, FMC spun off its machinery business, known as FMC Technologies, to shareholders. Just a week before the announcement of its latest split, FMC completed the sale of its peroxygens business to private equity firm One Equity Partners.

FMC’s decision to split comes at a time when chemical firms such as DuPont, Dow Chemical, and Air Products & Chemicals have come under pressure from activist investors to hive off cyclical businesses and focus on faster-growing ones. The difference is that FMC’s move appears to stem from an internal recognition of the diverging nature of its two parts rather than from investor activism.

Still, FMC’s split is reminiscent of DuPont’s decision in October to spin off its performance chemicals business to shareholders, notes stock analyst Laurence Alexander at investment banking firm Jefferies. For FMC, Alexander argues, “the split will sharpen the growth profile of the core FMC platform.”

In a cautionary note, debt-rating service Moody’s revised FMC’s outlook to “stable” from “positive” in part because the minerals business spin-off will leave the new FMC a smaller and less diverse operation. In addition, Moody’s notes that FMC will face stiff competition from larger crop protection firms including Monsanto, DuPont, and Syngenta.



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