Australia’s Orica Ltd to sell chemicals business to Blackstone Group for $653 mn

Orica Ltd, an Australia-based commercial blasting systems, mining and tunneling support systems maker, yesterday struck a deal to sell its chemicals business to funds advised by US private equity firm Blackstone Group for A$750 million ($653 million).

In August this year, the Melbourne-based company had announced that it had completed a strategic review of its chemicals business and that it would pursue a separation of the business, either by sale or demerger.

Following interest shown by buyers, Orica's board opined that a sale would likely result in higher and more certain value for shareholders than a demerger.

The sale includes the Chemicals trading businesses in Australia, New Zealand and Latin America and the Australian Chloralkali manufacturing business.

It also includes Bronson & Jacobs, a supplier to the food & nutrition and health & personal care industries in Australia, New Zealand and Asia.

As part of the sale, Orica said that it will retain responsibility for legacy environmental remediation obligations of the Chemicals business.

The transaction, which is subject to Australian Foreign Investment Review Board and New Zealand Overseas Investment Office approval, is expected to close in the first quarter of calendar 2015.

Orica managing director and CEO, Ian Smith, said, ''The certainty as to value and outcome of this transaction is a good result for Orica shareholders.''

Blackstone senior managing director and head of private equity for Australia, James Carnegie, said ''Orica is a world class company and we are excited about investing in its market leading chemicals business. Orica Chemicals is strongly positioned and we look forward to continuing its best-in-class standards of safety and service.''

Orica is the largest provider of commercial explosives and blasting systems to the mining and infrastructure markets, a leader in the provision of ground support in mining and tunnelling, and the leading supplier of sodium cyanide for gold extraction.

Orica also supplies general chemicals across a diverse range of markets, including agriculture, building and construction, food and beverage, pharmaceutical and personal care, plastics, pulp and paper and water treatment industries.

The company has workforce of over 14,000 people, operations in more than 50 countries and customers in more than 100, and has an annual turnover of A$6.9 billion.