August 16 2014, David R Brown
Australian multinational, Orica to demerge or sell its chemical distribution and manufacturing business
Australian–based multinational, Orica Limited has announced its intention to demerge or sell its chemical distribution and manufacturing business following a strategic review. A separation of the businesses would allow Orica to focus on its core Mining Services activities and capitalise on its global leadership positions in commercial explosives, ground support and sodium cyanide.
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Orica Chemicals is a leading supplier of chemical products to the mining, water treatment and other industrial, food and cosmetics markets in Australia, New Zealand with a growing presence in Asia (China, Indonesia, Thailand, Malaysia, Singapore) and Latin America (Chile, Peru, Colombia, Argentina and Brazil). Its annual revenue is approximately US$1.1Bn or €850M. A demerger would create a separate ASX listing for the Chemicals business. It is expected that Orica Chemicals would benefit from the freedom to develop its own corporate strategy, capital structure and financial policies appropriate for the business as a separately listed entity. A sell would value the business at around US$930M or €700M.
Orica is Australia's largest distributor of industrial chemicals importing more than 500,000tpa, as well as being Australia's largest manufacturer and marketer of chlorine, caustic soda and associated chlor-alkali products. Chemical distribution represents about 80% of Orica Chemicals business and includes Bronson & Jacobs, a leading distributor of ingredients to the food and nutrition, health, and personal care industries and Marplex, a distributor of commodity and engineering polymers.
Orica has reportedly already received a number of enquiries from third parties expressing non-binding preliminary interest to acquire the Chemicals business. Whilst demerger is currently the preferred approach, Orica has stated that it will consider any alternatives that are in the interests of shareholders. The company is to give a further update on the proposed separation at its full year results announcement on 19 November 2014.
About Orica
Orica (ASX: ORI) is a multinational corporation that provides commercial blasting systems, mining and tunneling support systems, and various chemical products. The company operates in more than 50 countries worldwide aand serves customers in more than 100. For the full financial year ending in September 2013 the Orica Group achieved revenues of A$6,898.1Bn (US$6.4Bn or €4.8Bn) and had around 14,500 employees worldwide. Orica’s two main business units are Mining Services and Chemicals. Orica's chemical business has history in chemical manufacturing and distribution which dates back to the 1920s.
Source(s): Orica ASX announcement
Further Information
Visit: http://www.orica.com