OM Group Selling Advanced Materials Business for $325 Million

01/22/2013| 10:19am US/Eastern

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   By Melodie Warner 
 

OM Group Inc. (>> OM Group, Inc.) agreed to sell its advanced materials business for $325 million to a joint venture to be held by Freeport-McMoRan Copper & Gold Inc. (>> Freeport-McMoRan Copper & Gold Inc.), 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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