Germany's Lanxess to buy
U.S. chemical firm Chemtura for $2.7 billion
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[September 26, 2016]
By Ludwig Burger
FRANKFURT (Reuters) - Lanxess AG
is to buy U.S. speciality chemical company Chemtura for 2.4
billion euros ($2.69 billion) including debt in the German company's
largest ever takeover, moving it further away from its main
synthetic rubber business.
Lanxess's offer of $33.50 per share is a premium of about 19 percent
to the Philadelphia-based company's share-price close on Friday.
The world's largest synthetic rubber maker will use existing funds
and new debt to buy Chemtura, Lanxess said in a statement,
describing the deal as its largest ever acquisition.
It is part of its push to diversify away from the synthetic rubber
unit, which depends heavily on the car industry and is under
pressure from rivals. It agreed to sell a 50 percent stake in that
business to Saudi Aramco for 1.2 billion euros last year.
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Its new core business includes highly specialized substances such as
ingredients for drugs and pesticides, leather-tanning chemicals,
construction pigments for concrete and roofing tiles, and water
treatment chemicals.
The Chemtura deal will help it boost its industrial lubricant
additives and flame retardant additives businesses.
It follows the 2010 takeover of Dutch company DSM for around 310
million euros and Brazilian rubber producer Petroflex in 2008 for
280 million euros.
The shares rose 8 percent to their highest in more than a year on
Monday, and were the best performers on the European 600 index
.
UBS analyst Patrick Rafaisz said the price represented a multiple of
10 over earnings before interest, taxes, depreciation and
amortization (EBITDA) and just seven times when including targeted
synergies.
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![](../images/092616pics/busine33.jpg)
A logo of Lanxess is seen next to dark clouds at Cologne Bonn
airport March 27, 2015. REUTERS/Wolfgang Rattay
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"The price paid for expanding is reasonable, in our view, and a
refreshing discount to the early- to mid teens multiples that have
become more typical in M&A during the last few quarters," Rafaisz
said.
The boards of both companies have unanimously approved the deal,
which is expected to close around mid-2017, Chemtura said in a
separate statement.
Lanxess also said it will no longer pursue its earlier-announced
share buy back of around 200 million euros.
Morgan Stanley advised Chemtura on the deal.
(Additional reporting by Ismail Shakil in Bengaluru; Editing by Tina
Bellon and Susan Thomas)
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