MOSCOW (MRC) -- Lanxess announced that it plans to withdraw from the leather business with the sale of its organic leather chemicals operation to TFL Ledertechnik (Rheinfelden, Germany), a worldwide supplier of leather chemicals and a portfolio company of asset-management firm Black Diamond Capital Management, said Chemweek.
According to the agreement, which is subject to approval from the relevant authorities, the purchase price comprises a fixed component of EUR80.0 million (USD94.4 million) and a performance-related component of up to EUR115.0 million. In addition, TFL will assume certain liabilities associated with the business, the company says. The transaction is expected to close in about mid-2021, it says.
The organic leather chemicals business has production at Leverkusen, Germany; Filago, Italy; and Changzhou, China. It generated 2019 sales in the "low three-digit million euros" range, Lanxess says. With this sale, “we are making Lanxess somewhat more independent from the automotive industry, a key target industry for leather products,” says Lanxess chairman Matthias Zachert.
Lanxess began its withdrawal from the leather business by divesting its chrome chemicals unit in January 2020. The company is scheduled to complete the sale of a stake in a chrome ore mine in South Africa by the end of 2020.
As MRC informed earlier, Lanxess has announced that it expects its core income to decline in 2020 as the global coronavirus epidemic is expected to damage its supply chains. The company forecasts that profit before exceptional items will slash EUR 50-100 million (USD56.4-112.8 million) as a result of coronavirus, with EUR20 million (USD22.6 million) impact projected for the first quarter. However, the company anticipates its operating business will remain stable for the year.
Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
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