COLOGNE, Germany—Lanxess A.G. has completed the acquisition of Chemtura Corp., one of the world's leading suppliers of flame retardant and lubricant additives, effective April 21.
The transaction closed earlier than projected, Lanxess said in a statement. The deal marks the largest acquisition in Lanxess' history with a total enterprise value of about $2.57 billion. The deal also brings to Lanxess new areas of business within the urethanes and organometallics markets.
The Cologne-based specialty chemicals company will absorb about 2,500 Chemtura employees at 20 sites in 11 countries worldwide. The former Chemtura businesses generate annual sales of about $1.6 billion. Lanxess projects synergy effects of about $107 million from the transaction to be realized by 2020.
"The acquisition of Chemtura is another major step in our realignment process and a significant milestone in our course of growth," Lanxess CEO Matthias Zachert said in a statement.
The executive added that the "new" Lanxess is taking shape, with the expanded additives business giving the firm an additional pillar. He said under the current portfolio structure, Lanxess will be more stable and profitable.
The deal also gives Lanxess an increased presence in North America, doubling the amount of production facilities to 24 and nearly doubling employment count to 2,800 in the region, up from 1,500. North America now represents about 21 percent of Lanxess' total sales.
Effective immediately, Lanxess will combine its existing additives business with the new Specialty Additives segment, valued at about $2.14 billion with 2,900 global employees. This segment comprises of the new Additives and Rhein Chemie business units.
It will also form a new Urethane Systems business unit of which Markus Eckert was appointed to lead. Products include hot-cast prepolymers, special aqueous urethane dispersions and polyester polyols. These are components of specialty polyurethanes, used primarily in the construction, mining, oil, gas, athletic equipment and electronics industries.
The Urethane Systems unit will join Lanxess' existing High Performance Materials unit to for a new business segment: Engineering Materials.
Finally, Lanxess is integrating Chemtura's organometallics business into its existing Advanced Industrial Intermediates business unit. The product line consists of chemical compounds used as catalysts in polymers production or for the synthesis of fine chemicals and pharmaceuticals.
"We will now focus our energy on rapidly and smoothly integrating the new businesses and employees, as well as on optimally serving our new and existing customers," Zachert said
The combined flame retardant and lubricant additives business will be anchored in the Additives business unit. Anno Borkowsky, who previously led Lanxess' Rhein Chemie business unit, will lead the new Additives business unit. Philipp Junge has been named to lead the Rhein Chemie business unit, which comprises of Lanxess' existing rubber and color additives businesses.
Lanxess projects expects medium-term growth of about 4 percent annually for the industrial lubricant additives market, driven primarily by steadily increasing demands placed on lubricants designed for performance capability and environmental compatibility.
"We are now one of the leading suppliers of industrial lubricants and possess an integrated value chain," Borkowsky said in a statement.
"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."
With sales of $8.24 billion in 2016, Lanxess operates 75 production sites in 25 countries with 19,200 employees. The firm develops, manufactures and markets chemical intermediates, additives, specialty chemicals and plastics. It also is a leading supplier of synthetic rubber through its Arlanxeo joint venture with Saudi Aramco.