Lanxess Wraps Up Takeover Of Emerald Kalama Chemical

Aug. 4, 2021
Acquisition is second largest in company’s history.

Specialty chemicals company Lanxess says it has completed the second-largest acquisition in its history with the takeover of Emerald Kalama Chemical. The U.S.-based specialty chemicals manufacturer was majority-owned by affiliates of private equity firm American Securities LLC. All required regulatory approvals have been received, according to Lanxess. The enterprise value of Emerald Kalama Chemical was $1.075 billion (EUR 900 million). After deducting liabilities, the purchase price was approximately $1.04 billion (EUR 870 million), which Lanxess reportedly financed from existing liquidity.

With the closing of the transaction, Lanxess grows by around 470 employees and the three production sites in Kalama/Washington (U.S.), Rotterdam (Netherlands) and Widnes (Great Britain).

In 2020, Emerald Kalama Chemical achieved global sales of approximately $425 million (EUR 375 million) and EBITDA pre exceptionals of around $90 million (EUR 80 million). Within three years, Lanxess expects an additional annual EBITDA contribution of around $30 million (EUR 25 million) from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion, according to the company.

Around three quarters of the sales of the acquired businesses are attributable to specialty products for the consumer care market. The acquisition makes Lanxess one of the leading providers of products for flavors and fragrances – an area in which the specialty chemicals company says it expects to see sustained strong growth rates. The substances are used primarily in personal care products, cosmetics and exclusive fragrances, as well as food and beverages. The product range in the new Lanxess portfolio includes more than 30 aroma chemicals that provide earthy, floral, fruity, spicy and herbal notes. Lanxess is incorporating this business into the newly established Flavors & Fragrances business unit, which will become part of the Consumer Protection segment.

The acquisition also strengthens Lanxess’ position in the preservatives business. The new products will be used in high-growth applications in the food and beverage industry as well as in detergents, fabric softeners, cosmetics and personal care products. Around a quarter of the sales of the acquired businesses are accounted for by specialty chemicals for high-growth industrial applications, primarily in the plastics, paints and coatings and adhesives industries. The products will be integrated into the Polymer Additives business unit.

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