Germany's Lanxess acquires Chemtura for €2.4bn

German specialist chemicals company Lanxess has successfully completed the acquisition of Chemtura, a US company that supplies flame retardant and lubricant additives.

All necessary regulatory approvals precedent to this transaction have been satisfied.

In February this year, Chemtura’s shareholders approved this acquisition.

Carrying a total enterprise value of €2.4bn, the Chemtura acquisition significantly expands Lanxess’ additives portfolio.

With the acquisition now complete, Chemtura’s urethanes and organometallics businesses will be integrated into the Lanxess portfolio.

Lanxess will also absorb nearly 2,500 Chemtura employees operating at 20 sites in 11 countries worldwide.

The combined Chemtura businesses generated annual sales of nearly €1.5bn.

Lanxess board of management chairman Matthias Zachert: “The acquisition of Chemtura is another major step in our realignment process and a significant milestone in our course of growth.

“The ‘new’ Lanxess is increasingly taking shape. The expansion of the additives business gives Lanxess an additional strong pillar. In its new set-up and with an even more balanced portfolio, the company will be much more stable and profitable.

“At the same time, Chemtura considerably strengthens our presence in the North American growth region.

“We will now focus our energy on rapidly and smoothly integrating the new businesses and employees, as well as on optimally serving our new and existing customers.”

The acquisition increases Lanxess’ production sites in North America from 12 to 24.

The region’s share in global sales also improves to 21% from the existing 17%.

The anticipated annual synergy effects from the acquisition are nearly €100m, with realisation targeted until 2020.

Lanxess financed the acquisition through a combination of cash and bonds, including two corporate bonds and a hybrid bond.

The deal will see Lanxess combine the entire additives business within the new Specialty Additives segment.

"The acquisition of Chemtura is another major step in our realignment process and a significant milestone in our course of growth."

The company also intends to strengthen its position in the segment of lubricant additives and synthetic lubricants for industrial applications.

It expects a growth of around 3%-4% annually for the industrial lubricant additives market, primarily due to the steady increase in demand for lubricants.

The new urethanes business will be placed within the newly formed Urethane Systems business unit.

This business includes a product range of hot-cast prepolymers, special aqueous urethane dispersions and polyester polyols that are used in construction, mining, petroleum, athletic equipment and electronics industries.

Image: Lanxess Headquarters in Cologne. Photo: courtesy of Rolf Heinrich, Köln via Wikipedia.