BY Fraser Tennant
In a move designed to boost its presence in North America, Germany-based specialty chemicals company Lanxess has accelerated its growth course to acquire Emerald Kalama Chemical for an enterprise value of $1.1bn.
Lanxess has stated that it will deploy existing liquidity to purchase Emerald, which is majority-owned by affiliates of US private equity firm American Securities LLC. Like its acquirer, Emerald is a specialty chemicals company whose products include food preservatives, household and cosmetic applications, flavours and fragrances, as well as plastics and adhesives for industry.
The Cologne-headquartered company was one of a number of potential suitors for US-based Emerald, which reportedly included private equity firms HIG Capital, Rhone Capital and TPG Capital.
“We are gaining further momentum on our growth course,” said Matthias Zachert, chairman of Lanxess. “The businesses of Emerald Kalama Chemical are an ideal fit for us. We will further strengthen our consumer protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America. All this will make us even more profitable and stable.”
Employing 500 people, Emerald runs three production sites in Kalama in the US state of Washington, Rotterdam in the Netherlands and Widnes in the UK. The company reported 2020 sales of approximately $425m, and approximately $90m in earnings before interest, taxes, depreciation and amortisation (EBTDA).
Around 45 percent of its turnover is generated in North America.
“The company has a very efficient setup, bundling all its production activities at only three sites,” added Mr Zachert. “That is why we expect to integrate the new business very quickly.”
With the acquisition of Emerald, Lanxess is pursuing a targeted expansion of its portfolio. The company has a strong position in the global business with antimicrobial active ingredients and preservatives, including for consumer protection products and animal hygiene, such as disinfectants effective against coronavirus (COVID-19).
The deal is expected to close in the second half of 2021 subject to approval by the relevant authorities.
News: Chemical firm Lanxess buys U.S.-based Emerald Kalama in $1.1 billion deal