Lanxess bares plans to acquire Chemtura

Lanxess announced plans to acquire US-based Chemtura Corporation. With the largest acquisition in its history, Lanxess is building on its own additives portfolio and will become one of the world’s major actors in this growing market.

 

The companies have signed a definitive acquisition agreement. Under the terms of the agreement, Chemtura shareholders will receive USD 33.50 per share in cash for each outstanding share of common stock held, which represents a 18.9% premium to the stock’s closing share price of USD 28.18 on September 23, 2016. The transaction with an enterprise value of approximately EUR 2.4 billion will be financed by Lanxess mainly through senior and hybrid bonds, as well as from existing liquidity. The transaction, which is expected to close around mid-2017, is subject to approval by Chemtura shareholders, required regulatory approvals and certain other customary closing conditions.

 

Headquartered in Philadelphia, Pennsylvania, Chemtura has 20 sites in 11 countries and approximately 2,500 employees worldwide. The company reported sales of around EUR 1.5 billion in the last four quarters with EBITDA pre exceptionals of approximately EUR 245 million (EBITDA margin of approx. 16%). Approximately 45% of Chemtura’s revenue is generated in North America. In addition to additives, Chemtura’s portfolio includes urethanes and organometallics.  

 

Chemtura’s two additive segments form the main pillars of the company’s business. Both will, together with Lanxess’ Rhein Chemie Additives business unit (ADD), form the new Performance Additives segment after the closing of the transaction. ADD already offers a wide range of specialty additives and service products for the plastics, rubber, lubricants and colorants production, and employs around 1,600 employees worldwide at more than 20 locations. 

 

The first pillar of Chemtura’s additives business includes lubricant additives and synthetic lubricants for industrial applications, such as in power generation and aviation. Chemtura manufactures the necessary precursors and intermediates. Combined with Lanxess' additives portfolio, the company will be a major supplier for industrial lubricants and will further strengthen its competitiveness through our integrated value chain. LANXESS expects the industrial lubricant additives market to grow at an annual rate of three to four percent in the medium term, primarily driven by steadily increasing requirements with respect to the performance and environmental sustainability of lubricants.

 

The second pillar is mainly comprised of the brominated flame retardant additives, elemental bromine and further bromine derivatives businesses. Brominated flame retardant additives are used because of their high effectiveness, especially in the construction industry for insulation and in the electronics industry. Chemtura is a major supplier of bromine and brominated products and is well positioned due to its backward integration. As a result of the acquisition, Lanxess will become a major global supplier of high performance flame retardant additives. In the future, it can offer customers brominated and phosphorous-based products from one source. Lanxess also expects medium-term growth rates of three to four percent per year in the field of flame-retardant additives.

 

Chemtura’s urethane business is a major provider for hot-cast prepolymers and for special, aqueous urethane dispersions and polyester polyols. These are components for special polyurethanes, which are used mainly in the construction, mining, oil/gas, sports and electronics industries. For example, rollers for conveyor belts and roller skates are manufactured from these polyurethanes. The urethanes business will be integrated into Lanxess' High Performance Materials segment, in which the high-tech plastics business is anchored. 

 

Chemtura is counted among the major companies worldwide in organometallics. Organometallics are chemical compounds that are used, among other things, as catalysts in polymer production and for synthesis of fine chemicals and pharmaceuticals. This business will in the future be part of Lanxess’ Advanced Industrial Intermediates business unit.