Lanxess AG will nearly triple the size of its additives business with the $2.7 billion takeover of U.S.-based flame retardants and lubricant additives group Chemtura Corp.
“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 the Lanxess board of management.
The Cologne,Germany-based plastics and chemicals group said it has signed an agreement with Chemtura in which the latter's shareholders will receive $33.50 per share in cash for each common share, which is a 18.9 percent premium to the Chemtura's closing share price of $28.18 on Sept. 23.
The total payout to shareholders will be $2.1 billion, while the total value (which includes the assumption of Chemtura debt and pension obligations) is $2.7 billion, which Lanxess said it will finance through debt and existing liquidity.
Lanxess said Chemtura's annual sales of about $1.7 billion will be added to the 850 million euros ($957 million) sales of its Rhein Chemie Additives business unit. Chemtura, based in Middlebury, Conn., has 20 sites in 11 countries and approximately 2,500 employees worldwide and Rhein Chemie has 1,600 employees at 20 sites.
Rhein Chemie already produces phosphorus-based flame retardants and industrial lubricant additives (along with additives for rubber and colorants). Chemtura's largest business is lubricant additives and it also produces brominated flame retardants used in the construction industry for insulation and in the electronics industry. Chemtura's smaller businesses in urethanes and organometallics are new additions to Lanxess's product portfolio.
“Flame retardant requirements continue to rise mainly due to the trend for energy-efficient construction,” said Anno Borkowsky, head of the Rhein Chemie business. “With this acquisition, we will become a major global supplier of high performance flame retardant additives. In the future, we can offer our customers brominated and phosphorous-based products from one source.”
Craig A. Rogerson, president, CEO and chairman of Chemtura, said: “The transaction provides premium value to our shareholders and benefits our customers and employees by making Chemtura part of a much larger, stronger global enterprise with the resources to fully support a more diverse suite of specialty chemicals products and services.”
The acquisition is expected to close around mid-2017, subject to approval by Chemtura shareholders and regulatory authorities.
In 2015, Lanxess's group sales were 7.9 billion euros ($8.9 billion) and it had about 16,700 employees in 29 countries. In April this year, Lanxess started its Arlanxeo joint venture in synthetic rubber with Saudi Aramco.