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Given the rising demand for natural colors in most food and personal care products, FMC Corp. (FMC - Analyst Report) has acquired U.K-based Phytone Ltd. Natural colors producer Phytone serves the food, beverage, personal care and nutrition sectors across the world.

Phytone will add to FMC's natural colors capabilities and augment FMC BioPolymer's industry leading, naturally sourced specialty ingredients that are used across food, pharmaceutical and personal care markets. On the same lines FMC had acquired South Pole Biogroup, a Chilean-based natural color and specialty nutrition ingredients manufacturer in October last year. The acquisition expanded FMC’s portfolio of naturally sourced specialty products used in the food, beverage, personal care, nutrition and pharmaceutical markets.

These acquisitions are integral to the company’s commitment to grow its new natural colors portfolio. It also serves an important step toward fulfilling its Vision 2015 growth strategy. A key Vision 2015 goal was to broaden its food product and technology platform by moving into adjacent market spaces. FMC estimates that by 2015 the high-growth, natural colors market will grow beyond $1 billion.

The natural food color industry is growing fast driven by the increasing awareness among consumers regarding environmental hazards of synthetic colors and the harmful impact of chemicals used for manufacturing. European countries have banned manufacturing of synthetic dye based colors and the products containing such colors. The embargo also includes the import of products using such colors.

We thus appreciate FMC’s move to increase its presence in the natural colors market. We currently have a Neutral recommendation on FMC which corresponds to the Zacks #3 Rank (short term Hold rating) held by the stock in the near term.

FMC Corp. is a diversified chemical company serving agricultural, industrial, environmental and consumer markets globally for more than a century with innovative solutions, applications and quality products.  The company operates its businesses in three segments: Agricultural Products, Specialty Chemicals and Industrial Chemicals. It competes with the likes of The Dow Chemical Company (DOW - Analyst Report) and E. I. du Pont de Nemours and Company (DD - Analyst Report).

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