Energy services company Flotek Industries (NYSE:FTK) is acquiring privately held Florida Chemical, the world's largest processor of citrus oils for use in solvents, chemical synthesis, and flavor and fragrance applications.
The privately held company creates high-performance, bio-based products for a variety of industries, including applications in the oil and gas business, which will complement Flotek's own position as a global developer and distributor of innovative specialty chemicals and down-hole drilling and production equipment.
Under the terms of the acquisition, Flotek will pay $49.5 million in cash and almost 3.3 million shares of its stock for the outstanding shares of Florida Chemical. To finance the cash portion of the deal, Flotek entered into a credit agreement with PNC Bank that will increase its total facility to $125 million and will be comprised of a $50 million term loan and a $75 million revolving credit facility.
Pointing out that the acquisition enables Flotek to secure a supply of key raw materials as well as direct control over raw material costs and inventory, CEO John Chisholm said: "Flotek intends to leverage the vast expertise of Florida Chemical's world-class research facilities and chemists with its own research expertise to create a leading global research team in renewal renewable and sustainable chemistries for the oilfield as well as other industrial and consumer applications."
Flotek plans to keep Florida Chemical's structure and operations in place, and Josh Snively, the specialty chemical maker's president and CEO, will remain president of the new subsidiary. Florida Chemical was founded in 1942. Through its two operating companies -- Florida Chemical Company and FC-PRO -- it has annual throughput of greater than 35 million pounds of citrus oil.