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FMC Corp (FMC) to Sell Epax Omega-3 Business to Pelagia

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FMC Corp.FMC has landed a definitive deal to divest its Epax Omega-3 business to Pelagia AS, a manufacturer of pelagic fish products. The financial terms of the transaction were not divulged.

Epax is a leading brand of concentrated omega-3 fatty acids for use in dietary supplements and pharmaceutical preparations. The transaction, which is subject to regulatory approvals and customary closing conditions, is expected to consummate by the end of third-quarter 2017.

FMC Corp. said that the Epax Omega-3 product line is a strong strategic fit for Pelagia and will also complement Pelagia's existing product portfolio. The acquisition also complements Pelagia's strategy of expanding its portfolio of value added products.

FMC Corp. has significantly outperformed the Zacks categorized Chemicals-Diversified industry over a year, aided by its expansion actions and strong demand across specialty end markets. The company's shares have rallied roughly 70.9% over this period compared with the industry's gain of 25.8% over the same period.

FMC Corp. should benefit from its strategic investments, acquisitions and efforts to expand its market position and strengthen its portfolio. The company is investing in technologies in its agriculture business and launching new products with a goal to enhance value to the farmers. FMC Corp. is also seeing strong demand in its Lithium unit.

The planned acquisition of a major portion of DuPont's DD Crop Protection business has also provided a significant growth platform for FMC's Agricultural Solutions unit. Under the terms of the agreement, FMC Corp. will buy DuPont's Cereal Broadleaf Herbicides and Chewing Insecticides portfolios as well as some of the latter's Crop Protection research and development pipeline and organization. As part of the deal, DuPont will also purchase FMC's Health & Nutrition business that raked in more than $700 million in revenues in 2016.

After deal closure (expected in fourth-quarter 2017), FMC Corp.'s Agricultural Solutions unit will become the fifth biggest crop protection chemical company in the world by sales with estimated annual revenues of around $3.8 billion. The acquisition will significantly increase the FMC Corp.'s presence in Asia and Europe and will be immediately accretive to its adjusted earnings per share.

However, FMC Corp. is still exposed to challenging agriculture market fundamentals. Agricultural market conditions remain challenging in North America due to elevated channel inventory levels and depressed farm income due to weak commodity prices. The company is also exposed to currency headwinds.

FMC Corp., in May, also cut its adjusted earnings outlook for 2017 to reflect the impact of the disposal of its Health & Nutrition unit which has been moved to discontinued operations. FMC Corp. now sees adjusted earnings in the band of $2.20 to $2.60 per share for the year, down from $3.20 to $3.60 per share it expected earlier.

FMC Corp. is a Zacks Rank #3 (Hold) stock.

FMC Corporation Price and Consensus

FMC Corporation Price and Consensus | FMC Corporation Quote

Stocks to Consider

Better-ranked companies in the chemical space include The Chemours Company CC and Kronos Worldwide, Inc. KRO , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Chemours has an expected long-term earnings growth of 15.5%.

Kronos has an expected earnings growth of 354.8% for the current year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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