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Lanxess to acquire US consumer specialties firm Emerald Kalama for more than USD1 billion

March 01/2021

MOSCOW (MRC) -- Lanxess says it has signed a binding agreement to acquire specialty chemicals manufacturer Emerald Kalama Chemical (Cuyahoga Falls, Ohio) for an enterprise value of USD1.08 billion; USD1.04 billion, after deducting debt-like items, reported Chemweek.

The transaction is expected to close in the second half of 2021, subject to approval by the relevant authorities, and it will be financed from Lanxesss existing liquidity, the company says. The deal forms part of Lanxesss targeted portfolio expansion in the consumer protection segment, the company says.

Affiliates of the private equity firm American Securities own a majority of Emerald Kalama, a company specialized in the production of specialties for the consumer segment, Lanxess says.

Emerald Kalama achieved 2020 sales of about USD425 million and EBITDA pre exceptionals of approximately USD90 million. Within three years following completion of the transaction, Lanxess expects an additional annualized EBITDA contribution of about USD30 million from synergy effects. The acquisition will be earnings-per-share accretive in the first fiscal year after completion, the company says.

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, says Matthias Zachert, chairman of Lanxess.

Emerald Kalama generates about 45% of its revenue in North America. About 75% of its sales are from preservatives for food, household, and cosmetic applications; flavors and fragrances; as well as products for animal nutrition. The remaining 25% are from the company's specialty chemicals business for industrial applications, including the plastics and adhesives industries, Lanxess says.

Emerald Kalama has about 500 employees worldwide and runs production sites at Kalama, Washington; Rotterdam, Netherlands; and Widnes, UK. Emerald Kalama Chemical has a very efficient set-up, bundling all its production activities at only three sites. That is why we expect to integrate the new business very quickly, says Zachert.

As MRC informed before, in January, 2021, Lanxess completed the sale of its membrane business to French resource management firm SUEZ. The deal was previously announced in July, 2020, as Lanxess realigned its water treatment technologies segment, resulting in the sale of its reverse osmosis membrane business.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1%  year on year.

Lanxess is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.


mrcplast.com
Author:Margaret Volkova
Tags:propylene, ethylene, compounding, petrochemistry, membranes, Lanxess, UK, Netherlands, Russia, USA.
Category:General News
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