Chemical company FMC Corporation (FMC - Analyst Report) has acquired all the shares of Omega-3 fatty acid maker Epax to bolster its nutrition and health division and expand in the high-growth nutraceutical market.
FMC Corp.’s buyout includes Epax’s two production facilities - Epax Nutra Holding III AS in Alesund, Norway, and Epax UK Holding III AS in Seal Sands, U.K. The deal is valued at roughly $345 million and is expected to be immediately accretive to the company’s earnings.
Epax, which was part of Trygg Pharma Group AS, produces high purity, premium grade Omega-3 EPA/DHA fatty acids that are mainly used in nutraceuticals, active pharmaceutical ingredient (API) and food markets. Epax uses proprietary purification and concentration production techniques to cater to the nutraceuticals market.
As part of the transaction, FMC Corp. has also entered into a long-term supply agreement with Trygg Pharma to provide it with high-concentration Omega-3 fish oil for use as an active pharmaceutical ingredient.
Bank of America Merrill Lynch, the corporate and investment banking division of Bank of America Corporation (BAC - Analyst Report), acted as the sole financial advisor to FMC Corp. for this transaction.
The Omega-3 fatty acids market is expected to grow 12 % to 15 % annually and holds a market supply of $2.1 billion per year. Strong demand for Omega-3 fatty acid concentrated products developed among buyers due to the increased awareness about the benefits Omega-3 has on cardiovascular and brain among others.
The acquisition is a strategic move by FMC Corp. to strengthen its position in the functional ingredients for the food, nutraceutical and pharmaceutical markets. This buyout is also a step forward for FMC Corp. to accomplish its Vision 2015 growth goals through targeted acquisitions that complement its technology, business and financial priorities.
Following the announcement, shares of FMC Corp. rose 0.9% to close at $63.55 on Jul 24.
FMC Corp., which currently carries a Zacks Rank #3 (Hold), will release its second-quarter 2013 results after the market closes on Jul 29.
Other companies in the chemical industry having favorable Zacks Rank are Cytec Industries Inc. and PPG Industries Inc. (PPG - Analyst Report). Both of them carry a Zacks Rank #2 (Buy).