Om Group to sell downstream business to Freeport-McMoRan led JV for $435 mn

US specialty chemicals and advanced materials company Om Group Inc yesterday said it will  exit its advanced materials business by selling the downstream portion of the business to a joint venture led by Freeport-McMoRan Copper & Gold Inc in a deal valued up to $435 million.

Cleveland, Ohio-based OM Group said that it will sell its cobalt refinery assets in Kokkola, Finland, to a joint venture between Freeport-McMoRan, Lundin Mining Corp and La Generale des Carrieres et des Mines for $435 million, comprising of initial cash payment of $325 million and potential future payments of $110 million based on achieving certain revenue milestones over three years.

Freeport-McMoRan will own 56 per cent and operate the joint venture, while Lundin will hold 24 per cent and Gecamines the remaining 20 per cent.

The advanced materials business generated 42 per cent of Om Group's 2011 revenue of $1.5 billion, according to Thomson Reuters data.

"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 Joe Scaminace, chairman and CEO of OM Group.

"I want to extend my appreciation to our Advanced Materials associates," said Scaminace.  "They have a long track record of operational excellence and commitment to customer success. This transaction further strengthens the business by providing a committed raw material supply stream and support from one of the world's largest and most successful mining companies,'' he added.