Specialty chemical company Lanxess is buying specialty chemical producer Emerald Kalama Chemical BV for $1.075 billion.
The deal announced Feb. 14 will allow the Cologne, Germany-based chemical company to accelerate its growth course and further expand into North America. After deducting debt-like items, the purchase price amounts to around $1.04 billion, which Lanxess will finance from available liquidity.
Lanxess AG is buying the business from Emerald Performance Materials LLC, a majority-owned affiliate of the U.S. private equity firm American Securities LLC.
The acquisition of Emerald Kalama, which generates about 75 percent of its sales with specialties in the consumer segment and with rest coming from the specialty chemical business for industrial applications, is strongly aligned with Lanxess’ strategy of growing its Consumer Protection segment. Lanxess has developed a strong position in the global business with antimicrobial active ingredients and preservatives, including for consumer protection products and animal hygiene. Examples are disinfectants effective against the coronavirus or the African Swine Fever.
“The businesses of Emerald Kalama Chemical are an ideal fit for us,” said Matthias Zachert, chairman of the Board of Management of Lanxess AG. Acquiring these will open up new application areas with strong margins, for example in the food industry and animal health sector, he added.
Emerald employs about 500 people worldwide and in 2020 hit sales of around $425 million and earnings before interest, taxes, deductions and amortization of approximately $90 million. The transaction is expected to be completed in the second half of 2021. It is still subject to approval by the relevant authorities.
Within three years following the completion of the transaction, Lanxess expects an additional annual EBITDA contribution of around $30 million from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion.
“Emerald Kalama Chemical has a very efficient setup, bundling all its production activities at only three sites. That is why we expect to integrate the new business very quickly,” said Zachert.