Proactive Investors - Run By Investors For Investors

Flotek Industries stock soars after deal to sell Florida Chemical to Archer Daniels Midland for $175M

Houston-based Flotek will still retain all of its patents after the deal
Flotek Industries headquarters
Flotek delivers reservoir-centric chemistry technologies to oil and gas clients designed to maximize oil and gas recovery

Flotek Industries Inc (NYSE:FTK) stock soared Friday after agreeing to sell Florida Chemical Co LLC, its consumer and industrial chemistry technologies segment, to Archer Daniels Midland Company (NYSE:ADM) for $175 million in cash.

Houston-based Flotek will retain all of its patents after the deal.

Investors cheered the sale with Flotek Industries stock nearly doubling to $2.26 in afternoon trade.

READ: Flotek Industries disappoints in Q2 following trouble in the citrus market

As part of the agreement, Flotek and Archer Daniels Midland entered into “long-term reciprocal supply agreements.”

The first will secure Flotek's long-term supply of d-limonene, a component of citrus oils. Additionally, Flotek will manufacture differentiated chemistries for Florida Chemical's industrial customers. Finally, the companies will explore opportunities to develop next-generation chemistry technologies for the oil and gas and agricultural industries.

The deal is likely to be completed by the first quarter of 2019, subject to customary closing conditions.

Flotek expects the sale to have “a negligible cash tax effect” as the gain on the transaction will be offset by the company's outstanding operating losses.

"We believe the benefits of this transaction are extremely compelling on multiple fronts and in the best interest of our stakeholders,” said Flotek Industries CEO John Chisholm.

Deal brings synergies

“We are very excited about our long-term relationship with Archer Daniels Midland to develop opportunities to more fully leverage their high-performing portfolio of products to better serve the oil and gas market. This transaction has created a synergistic relationship that brings strategic benefits to each company,” he added.

Flotek develops and delivers reservoir-centric chemistry technologies to oil and gas clients designed. The company’s custom, full-fluid solutions to the upstream oil and gas industry are aimed at maximizing oil and gas recovery in both new and mature fields. 

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

Updates on stock movement

View full FTK profile View Profile

Related Articles

oil well
February 06 2019
Company has exploration and production interests in shale licences in the US and Australia
May 07 2019
Output measured 602 barrels of oil per day in the quarter, compared to 607 bopd in the preceding three months.
oil and gas operations
July 03 2018
Analyst Ashley Kelty highlighted what could be characterised as favourable environment and opportunity for Rose Petroleum

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use