OM Group, Inc. (NYSE: OMG) announced on the 21st January 2013, the signing of definitive agreements to exit from the company’s Advanced Materials business. The transactions include the sale of the downstream portion of the business, including its cobalt refinery assets in Kokkola, Finland, to a joint venture between Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Lundin Mining Corporation (TSX: LUN) and La Generale des Carrieres et des Mines (Gecamines).
The sale comprises of initial cash consideration of $325 million and potential future payments of up to an additional $110 million based on the business achieving certain revenue targets over a period of three years. It is expected that the sale will close before the end of April 2013, subject to customary closing conditions and regulatory approvals.
Kokkola, located on the Baltic Sea in Kokkola, Finland, processes unrefined cobalt and related metals and manufactures advanced inorganic products for use in a variety of applications. Kokkola is the world’s largest supplier of cobalt chemicals and powders, with the company’s cobalt fine powders being used in the hard metal and diamond tooling industries.
Kokkola has been in operation since 1968 and has over 400 employees and approximately 500 customers in over 50 countries in Asia, Europe and the Americas.
“The divestiture of our cobalt business is the final step in exiting our legacy commodity businesses and is consistent with our strategy to move up the value chain into technology-based businesses with attractive growth prospects and more predictable earnings profiles,” stated Joe Scaminace, Chairman and CEO of OM Group.
“Following the sale, the company will be well-positioned to achieve its core strategic objectives with a strong balance sheet and a clear vision for the future. We plan to return capital to shareholders via our recently authorized share repurchase program, and we will continue to invest in our businesses to support our growth strategy,” Scaminace added.
In connection with the sale, OM Group will transfer its equity interests in its DRC-based joint venture known as GTL to its joint venture partners, subject to a security interest in favour of OM Group with respect to the joint venture’s performance of certain supply arrangements.
“I want to extend my appreciation to our Advanced Materials associates,” continued Scaminace. “They have a long track record of operational excellence and commitment to customer success. This transaction further strengthens the business by providing a committed raw material supply stream and support from one of the world’s largest and most successful mining companies.”
Posted by: Paul Whittaker, Editor ipmd.net, [email protected]