FMC Buys Omega 3 Maker for $345 Million in Nutrition Push

FMC Corp. agreed to buy a Norwegian supplier of Omega 3 fatty acids for $345 million, its largest-ever acquisition, to bolster its nutrition and health division.

The acquisition of Epax, to be added to FMC’s existing alginates business, will be immediately accretive to earnings, Philadelphia-based FMC said today. FMC is buying Epax from private-equity firm Lindsay Goldberg and Norwegian biotechnology company Aker BioMarine ASA. The deals’ multiple paid is in line with FMC’s current trading multiple, it said.

The purchase of the Oslo-based supplier of purified fish oil to supplement makers, and food and beverage companies highlights a growing focus at FMC on nutrition and health offerings. The U.S. company appointed Mike Smith, former head of its biopolymers division, to oversee expansion into ingredients for the food, personal care and drug industries.

“This acquisition introduces a premium Omega-3 fatty acid technology to our portfolio,” Smith said in the statement.

Shares of FMC rose 0.2 percent to $63.10 as of 10:55 a.m. in New York.

M&A Hotspot

With proven health benefits, Omega 3 has become a hotspot for merger and acquisitions as agricultural and chemical companies look to reduce volatility in their earnings brought about by weather impacts or economic swings. BASF SE, the world’s biggest chemical maker, this year purchased Pronova BioPharma to access its high-purity Omega 3 used in blockbuster heart drugs such as GlaxoSmithKline Plc’s Lovaza. Royal DSM NV purchased Ocean Nutrition Canada.

Epax, as part of FMC, will continue to supply high-purity Omega 3 as an active pharmaceutical ingredient to Trygg Pharma, which remains a joint venture of Aker and Lindsay Goldberg.

FMC, which already has seaweed processing operations in Norway as well as businesses in the U.K., paid an enterprise value to earnings multiple for the asset of about 10 to 10.5 times, based on FMC’s normal trading level. The transaction includes a facility in Alesund, Norway and one in Seal Sands, U.K., which is about to start commercial sales.

Fish Oil

The Omega 3 market is forecast to grow 12 percent to 15 percent annually, and is currently worth $2.1 billion a year, FMC said today. Increased demand for Omega 3 to enhance the nutritional benefits of processed foods and drinks has led to inflated fish oil costs. The raw material is largely sourced from Peru’s anchovy stocks, yet most of the nation’s catch is used industrially for fish feed.

FMC has exited phosphates, sodium percarbonates and zeolite operations as part of its transformation into a higher-margin business. Biopolymers has reported nine straight of growth and FMC Chief Executive Officer Pierre Brondeau said on a May 1 earnings call that “external opportunities” would be part of the strategy.

Before this deal, FMC had made about 19 purchases in three years of varying size, of as much as $100 million.

Bank of America Merrill Lynch acted as an adviser to FMC. Jefferies advised Lindsay Goldberg and Aker.