BY Fraser Tennant
In a €2.4bn ($2.7bn) transaction that ranks as its largest ever takeover deal, German speciality chemicals company Lanxess AG has announced that it is to acquire US-based Chemtura Corporation, a global provider of high-quality flame retardant and lubricant additives.
Under the terms of the definitive acquisition agreement, which will significantly expand Lanxess’ footprint in North America where approximately 45 percent of Chemtura’s revenue is generated, Chemtura shareholders will receive $33.50 per share in cash for each outstanding share of common stock held.
Furthermore, for Lanxess, the acquisition of Chemtura will be accretive to earnings per share in the first fiscal year and will be financed mainly through senior and hybrid bonds, as well as from existing liquidity.
“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 Lanxess. “Through the acquisition, we are further implementing our strategy to become a more resilient and profitable chemical company, as well as significantly building on our competitive positioning in medium-sized markets.”
Once the transaction is complete, Lanxess, which currently has approximately 16,700 employees in 29 countries, will have built on its Rhein Chemie Additives business unit by adding Chemtura’s two additive segments to form a new performance additives with expected annual synergies of €100m by 2020.
Headquartered in Philadelphia, Pennsylvania, Chemtura encompasses 20 sites in 11 countries and approximately 2500 employees worldwide. In the last four quarters the firm reported sales of around €1.5bn.
“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,” said Craig A. Rogerson, president, chief executive and chairman of Chemtura.
The transaction, expected to close around mid-2017, is subject to approval by Chemtura shareholders, required regulatory approvals and certain other customary closing conditions.
Recognising that his firm is set to become one of the world’s major actors in a growing market, Mr Zachert concluded: “Lanxess is taking a next and major step forward on its growth path.”