LANXESS and Saudi Aramco form joint venture for synthetic rubber

LANXESS and Saudi Aramco plan to establish a joint venture for synthetic rubber detailed in an agreement signed on 22 September. LANXESS and Saudi Aramco subsidiary, Aramco Overseas Company, will each hold a 50% stake in the joint venture, with annual sales of approximately three billion Euro in 2014. Saudi Aramco is to pay approx. EUR 1.2 billion in cash for its 50 percent share after deducting debt and other financial liabilities. The total joint venture is valued at EUR 2.75 billion.

The transaction still requires the approval of the relevant antitrust authorities and is expected to be completed in the first half of 2016.

LANXESS will contribute its synthetic rubber business to the new joint venture. This will include the Tire & Specialty Rubbers (TSR) and the High Performance Elastomers (HPE) business units, their 20 production facilities in nine countries and some 3,700 employees and additional support staff. The high-performance rubbers manufactured by LANXESS are mainly used in the production of tires and technical applications such as hoses, belts and seals. The main customers include the automotive and tire industries but the products are also used in the construction industry and by oil and gas companies.
Saudi Aramco will provide the joint venture with competitive and reliable access to strategic raw materials over the medium term.

The joint venture brings together the world’s largest producer of synthetic rubber and the world’s largest oil and energy producer to form a far-reaching strategic partnership.  

The new joint venture will be managed by a holding company headquartered in the Netherlands. The CEO will be appointed by LANXESS and the CFO will be appointed by Aramco Overseas Company. Each company will have equal representation on the JV’s board of directors. LANXESS will consolidate the JV’s financials.