Umicore to buy OM’s precious metals business

Cleveland-based cobalt giant OM Group (OMG-N) is selling its precious metals business to Belgium’s Umicore (formerly Union Miniere) for E643 million, or US$752 million, in cash.

The assets include automotive catalysts, fuel cells, precious metals chemistry, technical materials, jewelry and electroplating businesses, as well as a metals-management business.

OM originally acquired the assets in August 2001 from Degussa, Germany’s third-largest chemicals company.

Located in Europe, North and South America, Asia and Africa, these businesses employ about 3,500 people. Last year, they enjoyed combined sales of US$4.4 billion and an operating profit of US$78 million.

Umicore will also assume the businesses’s pension liabilities of E57 million, or US$66.9 million.

Upon closing, Martin Hess and Pascal Reymondet, presently the OM executives in charge of the autocatalysts business and the other OM businesses, will join Umicore’s executive committee.

The partners expect the deal to close in the third quarter, pending U.S. and European regulatory approvals.

Umicore will initially fund the acquisition with a bank financing arranged by Netherlands-based Fortis Bank, but this will be followed within the next year by longer-term equity and debt financings.

OM expects the sale to result in net proceeds of about US$700 million, which it will use to pay down debt. As of March 31, 2003, OM had current liabilities of US$466 million and long-term debt US$1.2 billion.

“Completing the sale of the precious-metals business will be a major milestone in the strategic plan announced to investors in December 2002,” says James Mooney, OM’s chairman and CEO. “Deciding to sell all the precious metals businesses was difficult as any decision we’ve made to date.”

For its part, Umicore says the acquisition will make it a “pre-eminent actor in the global precious metals business and marks a major step in Umicore’s strategy of expanding its activities towards more technology-intensive materials.”

Umicore believes that combining OM’s precious-metals business with its own precious metals refining and recycling businesses will result in a number of “significant and short and medium-term benefits.”