Compass Minerals (CMP.N) is reportedly in discussions with private-equity firms regarding a potential sale, following significant challenges stemming from a failed lithium-mining project that negatively impacted the company’s stock value. The Overland Park, Kansas-based minerals producer is currently valued at approximately $1.5 billion, including debt.
Current Situation:
Sources familiar with the matter indicate that Compass has been collaborating with investment bankers for several weeks to assess acquisition interest from multiple buyout firms. The discussions remain confidential, with sources requesting anonymity.
The talks are reportedly at an advanced stage, and a deal could be finalized in the coming weeks, although there is no guarantee of completion.
Market Reaction:
Following reports of the acquisition talks, Compass’s shares surged by over 30% on Friday.
Company Overview:
Compass Minerals produces salt for various industries, including transportation and food, as well as fire retardants and fertilizers.
The company has faced significant challenges this year, with its stock price dropping more than 50% prior to Thursday’s close.
Challenges Faced:
The company recently shut down its lithium unit, which had aimed to produce battery metals for electric vehicles, disappointing investors.
Earlier this year, Compass canceled plans for a large lithium project in Utah due to regulatory opposition, primarily concerning environmental concerns related to the Great Salt Lake.
Additionally, mild weather has adversely affected its mineral salts business, contributing to disappointing quarterly results.
Financial Performance:
For the quarter ending June 30, Compass reported a slight revenue decline to $203 million and incurred a net loss of $43.6 million.
In response to its financial challenges, the company announced plans to reduce its debt and suspend dividend payments to conserve cash.