LANXESS
Definite agreement to acquire US flame retardants producer Chemtura / Latest step in path to becoming “new Lanxess” / EUR 2.4 bn deal to close by mid-2017
Taking “the next and major step forward on its growth path,” German speciality chemicals producer Lanxess (Cologne; www.lanxess.com) has signed a definite agreement to acquire flame retardants and lubricant additives producer Chemtura (Philadelphia, Pennsylvania / USA; www.chemtura.com). The EUR 2.4 bn transaction is expected to close by mid-2017, subject to approval by Chemtura’s shareholders, the relevant regulatory authorities and other customary closing conditions. The largest acquisition in its history, the deal will build on Lanxess’ own additives portfolio and make the company one of the world’s leading producers in this particular field.

The announcement comes after Lanxess – which had been in dire economic straits for some time – corrected its 2016 earnings forecast upward (see Plasteurope.com of 12.08.2016). The German company said it plans to finance the takeover through both senior and hybrid bonds as well as existing liquidity. Lanxess added that it expects the acquisition to be accretive to earnings per share in the first fiscal year, with annual synergies of about EUR 100m expected by 2020.

With sales of about EUR 1.5 bn and EBITDA pre-exceptionals of EUR 145m in its last four quarters, Chemtura operates 20 sites in 11 countries, and is home to about 2,500 employees. About 45% of the group’s revenue is generated in North America, and the takeover will give Lanxess a much larger footprint in this global region.

Chemtura’s business activities are focused on additives, urethanes and organometallics. The latter are used, among others, as catalysts in polymer production, and will in future become part of Lanxess’ Advanced Industrial Intermediates business. The US group’s urethane activities – consisting of hot-cast prepolymers and polyester polyols – are used in the manufacture of speciality polyurethanes and will become part of Lanxess’ High Performance Materials segment.

But at the centre of the deal stand the US group’s additive activities, which will be merged with Lanxess’ RheinChemie (Mannheim / Germany; www.rheinchemie.com) additives business unit into a new Performance Additives segment. In addition to lubricant additives and synthetic lubricants used in industrial applications, Chemtura is also a leading supplier of brominated flame retardants, elemental bromine and other bromine derivatives. Anno Borkowsky, who heads Lanxess’ RheinChemie business, said the acquisition will make the company “a major global supplier of high performance flame retardant additives,” adding that, “In the future, we can offer our customers brominated and phosphorous-based products from one source.”

RheinChemie is backward integrated into the phosphorous-based flame retardants value chain, while Chemtura is backward integrated into bromine. The German company said it expects the global flame-retardant additives market to grow by 3-4% a year in the medium term. According to a recent study by US market researcher Freedonia (Cleveland, Ohio; www.freedoniagroup.com), the global market will reach 2.8m t by 2018, worth about USD 7 bn (see Plasteurope.com of 09.03.2015).

In a quest to focus on its high-performance polymers slate and improve its finances, Lanxess earlier this year spun off its synthetic rubber activities into Arlanxeo (Maastricht / The Netherlands; www.arlanxeo.com), a 50:50 joint venture with Saudi Aramco (Dhahran / Saudi Arabia; www.saudiaramco.com) – see Plasteurope.com of 15.04.2016.

Chemtura, too, has adjusted its business focus in the recent past, and in 2013 sold its antioxidant and UV stabilisers business to SK Capital Partners (New York / USA; www.skcapitalpartners.com), using the proceeds to repay debt and focus on speciality products (see Plasteurope.com of 06.05.2013).
27.09.2016 Plasteurope.com 964 [235179-0]
Published on 27.09.2016
Lanxess: Übernahme-Offerte für US-Konkurrenten ChemturaGerman version of this article...

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