Archer-Daniels-Midland Company entered into an agreement to acquire Florida Chemical Company, Inc. from Flotek Industries, Inc. for approximately $180 million.
January 10, 2019
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Archer-Daniels-Midland Company (NYSE:ADM) entered into an agreement to acquire Florida Chemical Company, Inc. from Flotek Industries, Inc. (NYSE:FTK) for approximately $180 million on January 10, 2019. The consideration is subject to post-closing working capital and other adjustments. Under the terms of the transaction, of the total consideration, Archer-Daniels shall pay $17.5 million, 6 months post completion of the transaction. Post disposal, Flotek Industries, Inc. (“Flotek”) will retain all of Florida Chemical Company (“FCC”) patents. In connection with the sale, Flotek and Archer-Daniels-Midland Company (“ADM”) have entered into long-term reciprocal supply agreements. The agreement contains certain termination rights for Flotek and ADM, including, among others, if the closing has not occurred on or prior to March 31, 2019. When the transaction is complete, FCC's approximately 75 employees will transfer to ADM.
The transaction is subject to customary closing conditions, including obtaining necessary approval related to the Hart-Scott-Rodino Act and regulatory approval. The closing of the transaction is expected during the first quarter of 2019. Flotek intends to use the net proceeds to pay off its credit facility balance of approximately $50 million. In addition, Flotek is currently considering investing $20 million to $30 million in previously identified organic growth capital projects and will carefully review other future potential uses of the remaining funds. Flotek intends to establish a Strategic Capital Committee (the "Committee") to evaluate and make recommendations to the Board regarding the manner in which Flotek will deploy the remaining net proceeds from the sale of FCC. This includes the potential for additional investments in its business, returning capital to shareholders and other potential alternatives.
Flotek anticipates that the transaction will have a negligible cash tax effect, as the gain on this sale should be substantially offset by the outstanding net operating losses. Evercore Group L.L.C. is acting as exclusive financial advisor to Flotek in connection with the transaction. Casey W. Doherty of Doherty & Doherty LLP acted as legal advisor for Flotek.David Schwartzbaum and Josh Nulman of Covington & Burling LLP acted as legal advisor to Evercore Group L.L.C.
Flotek Industries, Inc. is a technology-driven, specialty green chemistry and data company. The Companyâs segments include Chemistry Technologies and Data Analytics. The Companyâs Chemistry Technologies segment designs, develops, manufactures, packages and distributes green, specialty chemicals that help customers improve their return on invested capital, lower operational costs and realize tangible environmental benefits aimed at enhancing the profitability of hydrocarbon producers. The Companyâs Data Analytics segment provides analytics associated with their hydrocarbon streams in seconds rather than minutes or days. The real-time access to information prevents waste, reduces reprocessing and allows users to pursue automation of their hydrocarbon streams to increase their profitability. It helps customers across industrial and commercial markets improve their environmental performance. It serves specialty chemistry needs for both domestic and international energy markets.
Archer-Daniels-Midland Company entered into an agreement to acquire Florida Chemical Company, Inc. from Flotek Industries, Inc. for approximately $180 million.
FLOTEK INDUSTRIES, INC. 
