NEW YORK (The Deal) -- Chemicals maker
FMC (
FMC_) has agreed to buy crop-protection products maker
Cheminova from holding company
Auriga Industries for just over 10.5 billion Danish kroner ($1.8 billion), bulking up its agricultural operation ahead of a planned breakup.
Philadelphia-based FMC will pay Dkr8.54 billion in cash and assume Dkr2 billion in debt to get hold of the Harboore, Denmark-based operation, which is Auriga's only business. The deal equates to a valuation of about Dkr 333 per Auriga share, the listed seller said.
FMC CEO Pierre Brondeau in March announced plans to split his group into two public companies by separating its nutritional and agricultural operations from its minerals businesses. The addition of Cheminova will boost sales at FMC's agricultural division by about 30%, or $1.15 billion, expand its presence in Europe and Latin America and give it access to new treatments to protect cereals, sugarcane, soybeans and cotton.
"Cheminova is a company that we have long considered to be an attractive potential partner," Brondeau said in a statement. "This transaction will broaden our agricultural solutions portfolio and significantly strengthen our market access in key agricultural end markets."
FMC's deal follows in the footsteps of U.S. chemical-sector holding company Platform Specialty Products Corp., which has snapped up two crop protection operations this year. Platform Specialty, which was created by Jarden Corp. CEO and chairman Martin Franklin, in August agreed to pay €300 million ($389 million) for Belgium's Agriphar Group, and in April spent $1 billion on the agricultural unit of Chemtura Corp.
FMC will pay about 13 times earnings for Cheminova, based on the €110 million of Ebitda reported on the target's website. That is in line with the about 12 times earnings that Platform Specialty paid for Agriphar and a little higher than the 10 times earnings that it paid for the Chemtura unit.
FMC said on Monday it will sell its Alkali Chemicals unit to ease pressure on a balance sheet that will take on new debt to fund the acquisition of Cheminova.