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LANXESS and Advent to acquire DSM Engineering Materials business for €3.7 billion
Source:Adsale Plastics Network     Editor:VC    Date:31.May.2022

LANXESS and Advent International (“Advent”), one of the largest global private equity investors with a well-established track record in chemicals investing, are establishing a joint venture for high-performance engineering polymers.

 

The two companies today (31 May) signed an agreement to acquire the DSM Engineering Materials business (DEM) from Royal DSM, which will become part of the new joint venture. The purchase price is around €3.7 billion and will be financed by the joint venture via equity from Advent and external debt.

 

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LANXESS and Advent International are establishing a joint venture, and to acquire the DSM Engineering Materials business (DEM) from Royal DSM.


The business represents sales of around €1.5 billion with an EBITDA margin of approximately 20%. DEM is one of the leading global suppliers in high-performance specialty materials that address key market needs in electronics, electrical and consumer goods.

 

Advent has invested in over 30 companies in the chemicals industry over recent years. Examples include Caldic, Röhm, allnex, Oxea, and VIAKEM.

 

LANXESS’ HPM business unit transferred to the joint venture

 

In addition, LANXESS will contribute its High Performance Materials (HPM) business unit to the joint venture. HPM is one of the leading suppliers of high-performance polymers, which are used primarily in the automotive industry. The business represents annual sales of around €1.5 billion with EBITDA pre exceptionals of around €210 million.

 

Advent will hold at least 60% in the joint venture. LANXESS will receive an initial payment of at least €1.1 billion and a stake of up to 40% in the joint venture.

 

This move further sharpens LANXESS’ business portfolio, which will consist of three specialty chemicals segments once the transaction is completed. It will use the proceeds of the transaction to reduce debt.


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LANXESS will contribute its High Performance Materials (HPM) business unit to the new joint venture.

 

LANXESS plans a share buy-back program with a volume of up to €300 million. It will have the possibility to divest its stake in the joint venture to Advent at the same valuation earliest after three years.

 

The transaction is still subject to approval by the authorities. Closing is expected in the first half of 2023.

 

Automotive applications the focus area

 

The automotive industry is a focus customer sector for the new joint venture. The polymers are used, among other things, for lightweight elements in structural parts but also in the interior and often replace metal parts. In this way, weight can be saved and CO2 emissions reduced.

 

An important growth area is electromobility. The polymers are used, for example, in the construction of battery and charging systems, electronic control systems and power electronics.

 

Besides, the materials are used in the electrical and electronics industry, for example in components for smartphones, IT and household appliances.

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