German synthetic rubber maker Lanxess to buy US-based Chemtura for $2.12 bn
26 September 2016
German synthetic rubber maker Lanxess AG yesterday struck a deal to buy specialty chemical company Chemtura Corp for about $2.12 billion in cash in order to become a major global player in the additives business.
Under the terms of the deal that has been approved by the boards of both companies, Lanxess will pay $33.50 for each Chemtura share, a premium of about 19 per cent to Chemtura's closing price of $28.18 on Friday.
Lanxess will fund the acquisition with existing funds and new debt to buy Chemtura in a deal with an enterprise value of about €2.4 billion ($2.69 billion).
Lanxess said that it expects annual synergies of €100 million by 2020 and severance and other one-time costs to be about €140 million.
Lanxess also said it will no longer pursue its earlier-announced €200-million share buyback program.
Based in Philadelphia, Pennsylvania, Chemtura is one of the major global providers of high-quality flame retardant and lubricant additives. In addition to additives, Chemtura's portfolio includes urethanes and organometallics.
It 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 with around 45 per cent of it being generated in North America.
Lanxess, based in Cologne, is a leading specialty chemicals company devoloping chemical intermediates, specialty chemicals and plastics.
It has sales of €7.9 billion in 2015, employs around 16,700 people in 29 countries, and has 55 production sites worldwide.
It also has a joint venture called Arlanxeo with Saudi Aramco.
The acquisition will strengthen its additives businesses, and allow it to better compete in the lubricant chemicals market against Berkshire Hathaway Inc.'s Lubrizol unit, and flame-retardant producers such as Albemarle Corp. and Israel Chemicals Ltd.
The deal will also give Lanxess two new lines of business - urethane polymers used to coat mining equipment and sporting goods, and organometallics, a type of compound often used as a catalyst.
''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 Lanxess.
''Through the acquisition, we are further implementing our strategy to become a more resilient and profitable chemical company. We are significantly building on our competitive positioning in medium-sized markets and increasing our presence in North America,'' he added.