New markets and presence strengthened: Lanxess purchases in the USA

New markets and presence strengthened
Lanxess purchases in the USA

The Cologne-based specialty chemicals group Lanxess is expanding its commitment in the consumer sector and animal health. The company is taking over a US provider for around one billion dollars.

The specialty chemicals group Lanxess takes over the US company Emerald Kalama Chemical. "Emerald Kalama Chemical's business is an ideal match for us," said Lanxess boss Matthias Zachert. "We are further strengthening our Consumer Protection segment and developing high-margin new fields of application, for example in the food industry and animal health. We are also expanding our presence in our growth region North America. All of this makes us even more profitable and stable."

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Less liabilities would result in a purchase price of around one billion US dollars (around 867 million euros). The transaction will be financed from existing liquid funds and is expected to be completed in the second half of 2021.

Emerald Kalama Chemical employs around 500 people worldwide and operates three plants in the USA, the Netherlands and the UK. The company reported revenue of around $ 425 million in 2020 and operating earnings before interest, taxes, depreciation and special items (Ebitda) about $ 90 million.

Emerald Kalama Chemical generates around 45 percent of its sales in North America. Around three quarters of sales came from specialties for the consumer sector – such as preservatives for food, household and cosmetics, aromas and fragrances and products for pet food. The remaining quarter comes from the business with specialty chemicals for industrial applications.

Ebitda contribution of 25 million euros

Lanxess, headquartered in Cologne, has around 14,400 employees in 33 countries. With the production, development and sale of chemical intermediates, specialty chemicals as well as additives and plastics, a turnover of 6.8 billion euros was achieved in 2019.

Through savings in the course of the takeover, Lanxess expects an additional annual Ebitda contribution of around 30 million dollars, i.e. around 25 million euros, within three years of completion of the transaction. For comparison: In the pre-Corona year 2019, Lanxess had achieved an operating result of around one billion euros. In the virus crisis year 2020, based on the latest statements about a surprisingly strong final quarter, it should have been around 860 million euros.

For years, Lanxess boss Matthias Zachert has been aligning the group more closely with specialty chemicals, which promise higher profit margins than the business with bulk and standard goods. In addition, business should then be more stable even in economically difficult times. The strategy also includes takeovers and sales of company parts. The purchase of the French manufacturer of specialty fungicides for the packaging industry, Intace, was only announced in mid-January. In addition, the management is currently negotiating with the French manufacturer of disinfection and hygiene solutions Theseo. Both are rather smaller deals, but Zachert had emphasized that a larger takeover – such as the recently announced purchase of Emerald Kalama – was possible in view of the "strong financial situation".

. (tagsToTranslate) Lanxess (t) acquisitions and mergers (t) chemical industry