FMC Corp. share price up, to acquire Auriga Industries subsidiary Cheminova in a $1.8-billion deal

FMC Corp. revealed in a statement today that it reached an agreement to acquire the Danish fungicide-ingredient manufacturer Cheminova in a deal estimated to $1.8 billion. According to FMCs statement, the acquisition will be financed through a mixture of debt and existing cash. The deal is expected to be finalized in early 2015.

Cheminova is currently a subsidiary of Auriga Industries A/S. The unit is to be sold to FMC at the price of 8.5 billion Danish kroner (almost $1.5 billion), or 333 kroner a share, excluding net debt. The board of Auriga has recommended its shareholders approve the deal, which will add the Cheminova division to the already existing Agricultural Solutions unit of FMC and by this will help the U.S.-based company to expand its customer base in Europe. The takeover will also help FMC expand its offering in crops to include cereals.

Cheminova is also expected to be de-listed after the deal is finalized. The takeover is subject to approval by Aurigas shareholders, who will decide the fate of the unit at an extraordinary general meeting expected in October.

As reported by the Wall Street Journal, the Chief Executive Officer of FMC – Pierre Brondeau said: “This transaction will broaden our Agricultural Solutions portfolio and significantly strengthen our market access in key agricultural end-markets”. He added: “Cheminova is a company that we have long considered to be an attractive potential partner.”

Auriga Industries revealed in July this year that it was considering a sale of the Cheminova subsidiary. According to some banking sources, debt financing of up to €720 million ($962 million) had been prepared for the sale. According to its website, Cheminovas EBITDA amounted to approximately €110 million ($142 million), valuing its sale price to around 13 times its earnings.

FMC Corp. rose by 0.24% on Friday in New York to close at $65.60 per share, marking a one-year change of -2.58%. The company is valued at $8.74 billion. According to CNN Money, the 11 analysts offering 12-month price forecasts for FMC Corp. have a median target of $77.00, with a high estimate of $100.00 and a low estimate of $71.00. The median estimate represents a +17.38% increase from the last price of $65.60.