By Melodie Warner
OM Group Inc. (OMG) agreed to sell its advanced materials
business for $325 million to a joint venture to be held by
Freeport-McMoRan Copper & Gold Inc. (FCX), Lundin Mining Corp.
(LUNMF, LUN.T) and La Generale des Carrieres et des Mines.
The specialty chemicals and materials company said the sale also
includes its cobalt refinery assets in Kokkola, Finland.
Shares jumped 15% to $26.60 as OMG Group said it may also
receive up to an additional $110 million based upon certain revenue
targets over a three-year period. The stock has climbed 28% over
the past three months.
"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," said Chairman and Chief Executive Joe
Scaminace.
OM Group predicts the sale will close before the end of April,
after which it expects to have more than $500 million in cash on
hand.
The company plans to repurchase up to $50 million of stock,
repay a substantial portion of its debt and support its strategy of
profitable organic and strategic growth.
OM Group also said market conditions remained difficult
throughout the fourth quarter, particularly in Europe and in global
consumer electronics markets.
The company reiterated it expects no rare-earth pricing benefits
in the fourth quarter and warned it now expects a significant
lower-of-cost-or-market charge to reflect decreased rare earth
prices.
-Write to Melodie Warner at melodie.warner@dowjones.com
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