USA – Archer Daniels Midland company (ADM) has reached an agreement to acquire Winter Haven based producer and distributor of essential oils and citrus isolates, Florida Chemical Company (FCC) for a total consideration of US$175 million.
The deal, subject to post-closing working capital and other adjustments will be funded in cash and expected to close in the first quarter of 2019, according to Flotek Industries.
ADM and Flotek will explore opportunities to jointly develop next-generation chemistry technologies for the oil and gas and agricultural industries, in addition to securing Flotek’s long-term supply of d-limonene.
The two have also entered into long-term reciprocal supply agreements with Flotek securing the deal to manufacture differentiated chemistries for Florida Chemical’s industrial customers.
“ADM is already a leader in natural flavors for food and beverages, offering a wide variety of high-value products and solutions in areas such as vanilla and mint, and this acquisition will place us in a leadership position for citrus flavors as well.
FCC is a Consumer and Industrial Chemistry Technologies division of Flotek Industries Inc (FTK) and produces citrus flavor materials and essential oils, flavour enhancers for grapefruit and citrus flavor modifiers.
Citrus is one of the fastest-growing flavor categories, and the single most important taste profile for beverages, and no one in North America does citrus better than Florida Chemical Company,” said Vince Macciocchi, President of ADM’s Nutrition business.
Flotek acquired Florida Chemical in 2013 to help integrate its supply of citrus oils, a key raw material in its patented Complex Nano-Fluid technologies.
The company is looking to investing US$20 million to US$30 million of the capital in identified organic growth capital projects and also pay off its credit facility balance of approximately US$50 million.
“We believe the benefits of this transaction are extremely compelling on multiple fronts and in the best interest of our stakeholders.
This transaction unlocks significant value for our stakeholders, while maintaining our access to key raw materials for our Energy Chemistry Technologies (“ECT”) business.
The transaction also enhances our flexibility to evaluate and pursue the long-term strategy for our core ECT business.
Additionally, we are very excited about our long-term relationship with ADM to develop unique opportunities to more fully leverage their vast, high-performing portfolio of to better serve the oil and gas market for many years to come.
This transaction has created a synergistic relationship that brings strategic benefits to each company and our stakeholders,” said John Chisholm, Flotek’s Chairman, President and Chief Executive Officer.
When the transaction is completed, FCC’s approximately 75 employees will transfer to ADM.