COLOGNE, Germany—Lanxess A.G. is making a big splash in the additives market.
The Germany-based specialty chemicals company has signed an agreement to acquire Chemtura Corp., a U.S.-based flame retardants and lubricant additives producer, for about $2.5 billion. The deal is projected to close by mid-2017, and if approved it would triple the size of Lanxess' additives business.
The transaction is subject to approval by Chemtura shareholders and regulatory authorities. Shareholders of Chemtura will receive $33.50 per share in cash for each outstanding share of common stock held, representing an 18.9 percent premium to the stock's closing share price of $28.18 as of Sept. 23.
“With this acquisition, we are forming a champion in the field of additives and are strengthening our already profitable portfolio,” Lanxess CEO Matthias Zachert said in a statement. “Through the acquisition, we are further implementing our strategy to become a more resilient and profitable chemical company.”
He added that the acquisition builds on Lanxess' position in medium-sized markets and increases its presence in North America. The firm projects about $111.4 million in cost synergies by 2020.
Chemtura shareholders will receive $2.1 billion, with the rest of the purchase price going toward the assumption of Chemtura debt and pension obligations. Lanxess said it will finance the acquisition through debt and existing liquidity.
“Lanxess made the best financial proposal for our shareholders,” Chemtura CFO Stephen Forsyth said. “But I think what sets them apart from a strategic perspective is the complimentary nature between their businesses and our businesses. This has always been about what's the next step for Chemtura's businesses. Here we have a company where there are very few direct overlaps between what we do, and they serve many of the same applications that we serve. So for both companies you get a natural product line extension, and we're better able to serve those customers and applications.”