Ohio-based Ferro Corp. (NYSE:FOE) is getting out of the pharmaceuticals business.
The company, whose forte has always been the manufacturing of specialty chemicals, announced Monday that it has sold its Pfanstiehl Laboratories pharmaceuticals subsidiary to an affiliate of private equity firm Med Opportunity Partners, LLC.
Med Opportunity will pay $16.9 million cash up front, and Ferro will have the opportunity to receive a potential earn-out of up to $8 million more over the next two years if Pfanstiehl hits certain earnings targets. (The subsidiary earned $2.4 million last year). Ferro also gets to keep the rights to claim certain tax benefits that might otherwise have moved with Pfanstiehl to Med Opportunity -- worth an estimated $5 million.
Ferro is in the process of unloading "non-core" assets. It sold off its solar pastes assets earlier this year, yet another step in a plan to reduce costs by $50 million annually, and focus on its most profitable ventures.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Shares of Ferro Corporation Plunge After Rejection of Buyout Offers
Ferro Corporation's management didn't like the recent buyout offers from private capital, but Wall Street seems to think it should have taken the deal.
Why Ferro Corporation's Shares Popped 15% Late Friday
Could a buyout of this materials company be in the cards?