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New strategic setup of Lanxess.
New strategic setup of Lanxess.

On April 21, German specialty chemicals company Lanxess has completed the acquisition of US company Chemtura earlier than originally expected.

With a total enterprise value of €2.4 billion, Chemtura is the largest acquisition in the history of Lanxess. In addition to additives, Chemtura's urethanes and organometallics businesses will be integrated into the Lanxess portfolio. The former Chemtura businesses generate annual sales of approximately €1.5 billion.

"The acquisition of Chemtura is another major step in our realignment process and a significant milestone in our course of growth. The 'new' Lanxess is increasingly taking shape. The expansion of the additives business gives us an additional strong pillar. In its new set-up and with an even more balanced portfolio, the company will be much more stable and profitable. At the same time, Chemtura considerably strengthens our presence in the North American growth region," said Matthias Zachert, Chairman of the Board of Management of Lanxess AG.

He said the company will now focus on rapidly and smoothly integrating the new businesses and employees, which include some 2,500 Chemtura employees at 20 sites in 11 countries worldwide.

Through the acquisition, Lanxess s now represented at 24 production sites (previously 12) and employs approximately 2,800 staff (previously 1,500). North America's share in global sales increases from approximately 17% to approximately 21%.

Effective immediately, the company will combine its entire additives business within the new Specialty Additives segment. This segment is an additional pillar in the Lanxess group, with annual sales of approximately €2 billion and some 2,900 employees worldwide.

The segment comprises the new Additives and Rhein Chemie business units. The combined business with flame retardant and lubricant additives is anchored in the Additives business unit, which is headed up by Anno Borkowsky. The Rhein Chemie business unit, headed up by Philipp Junge, comprises the existing rubber and color additives businesses of Lanxess.

Lanxess is also significantly strengthening its competitive position in the area of lubricant additives and synthetic lubricants for industrial applications. "We are now one of the leading suppliers of industrial lubricants and possess an integrated value chain," explained Borkowsky.

The company expects medium-term growth of 3-4% annually for the industrial lubricant additives market, driven primarily by steadily increasing demands placed on lubricants as regards performance capability and environmental compatibility.

In addition, Lanxess is expanding its market position for flame retardant additives and now also operates the former Chemtura businesses with brominated flame retardant additives, bromine and bromine derivatives.

"Flame retardance requirements are continuously rising due particularly to the trend toward energy-efficient construction. This acquisition will also make us one of the world’s leading suppliers of flame retardant additives. As of today, we can offer our customers an array of complementary brominated and phosphorus-based products from a single source," said Borkowsky.

Lanxess also expects medium-term annual growth rates of 3-4% for the area of flame retardant additives.

The urethanes business is new for Lanxess. Effective immediately, it will be placed within the newly formed Urethane Systems business unit headed up by Markus Eckert. The product range includes hot-cast prepolymers, special aqueous urethane dispersions and polyester polyols. These are components of specialty polyurethanes (PU), used primarily in the construction, mining, oil, gas, athletic equipment and electronics industries.

Urethane Systems will join the existing High Performance Materials business unit of Lanxess to form the new Engineering Materials segment.

Also new in the Lanxess portfolio is the organometallics business. These are chemical compounds that are used, among other applications, as catalysts in polymers production or for the synthesis of fine chemicals and pharmaceuticals. With immediate effect, this business is being managed in the existing Advanced Industrial Intermediates business unit of Lanxess.

The expected annual synergy effects from the transaction amount to approximately €100 million with realization targeted until 2020, according to the company.

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