Germany specialty chemicals company Lanxess announced plans to acquire US-based Chemtura Corporation, a supplier of flame retardants and lubricant additives.
The transaction with an enterprise value of approximately €2.4 billion, will be Lanxess’ largest acquisition in history. It will be financed mainly through senior and hybrid bonds, as well as from existing liquidity.
The deal, which is expected to close around mid-2017, is subject to approval by Chemtura shareholders, required regulatory approvals and certain other customary closing conditions.
Chemtura’s two major additive segments, together with Lanxess‘ Rhein Chemie Additives business unit (ADD), will form the new Performance Additives segment after the closing of the transaction.
“With this acquisition, we are forming a champion in the field of additives and are strengthening our already profitable portfolio,” said Matthias Zachert, Chairman of the Board of Management of Lanxess AG. “Through the acquisition, we are significantly building on our competitive positioning in medium-sized markets and increasing our presence in North America.”
Headquartered in Philadelphia, Pennsylvania, Chemtura has 20 sites in 11 countries and approximately 2,500 employees worldwide. The company reported sales of around €1.5 billion in the last four quarters.
The first pillar of Chemtura’s additives business includes lubricant additives and synthetic lubricants for industrial applications, such as in power generation and aviation.
The second pillar is mainly composed of the brominated flame retardant additives, elemental bromine and further bromine derivatives businesses.
Approximately 45% of Chemtura’s revenue is generated in North America. In addition to additives, the company’s portfolio includes urethanes and organometallics.
“The transaction provides premium value to our shareholders and benefits our customers and employees by making Chemtura part of a much larger, stronger global enterprise with the resources to fully support a more diverse suite of specialty chemicals products and services,” said Craig A. Rogerson, President, CEO and Chairman of the Board of Chemtura.
For Lanxess, the acquisition of Chemtura will be accretive to earnings per share (EPS) in the first fiscal year, with annual synergies of approximately €100 million expected by 2020.
“Additives is a very attractive business field in specialty chemicals. In addition to their relatively low capital intensity, they require strong expertise and enable customized solutions. In this area, both Chemtura and Lanxess have long-standing expertise,” said Anno Borkowsky, Head of the Lanxess business unit Rhein Chemie Additives.
Source: China Plastic & Rubber Journal
