Orica to split mining and chemicals divisions
Australia-based Orica (ASX:ORI) announced Wednesday it will demerge or sell its chemicals business in a deal worth up to $1 billion, carrying out a long-term transition away from chemicals to become a mining services provider.
A demerger would create a separate ASX listing for the chemicals business, recently hit with more than $750,000 in fines for a series of pollution incidents spanning from October 2010 to December 2011, as well as safety breaches at two of its sites in New South Wales.
Orica has a track record of successful demergers, with its spin-off of fertilizer and explosives maker Incitec Pivot and then of Dulux Paint in 2010.
The company said it had already received a number of offers from parties looking to acquire the chemicals division, which has revenue of $1.2 billion and accounts for roughly 8% of group earnings. It added that, while the offers will be considered, its preferred option was demerger.
The firm will provide a further update on the proposed separation at its full year results announcement on Nov. 19.
Image courtesy of Orica.