For 867 million euros: LANXESS buys US manufacturer of substances for antimicrobial agents | message
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Emerald Kalama Chemical is to be purchased for 1.04 billion US dollars (867 million euros), as the Cologne-based company announced on Sunday. The deal should be financed with existing cash and is expected to be completed in the second half of 2021. “We (…) develop high-margin new fields of application, for example in food industry and animal health, said LANXESS boss Matthias Zachert according to the announcement. In addition, the presence in the growth region North America will be increased.
Speculations about an interest in the company, which produces, among other things, preservatives for food, household and cosmetics, flavorings and fragrances as well as products for pet food, had already existed at the end of 2020.
Emerald Kalama Chemical employs around 500 people worldwide and operates three production sites in the USA, the Netherlands and Great Britain, it said. The company reported sales of around $ 425 million in 2020 and earnings before interest, taxes, depreciation and amortization (Ebitda) and before special items of around $ 90 million.
Thanks to savings made in the course of the takeover, LANXESS expects an additional annual Ebitda contribution of around 30 million dollars, i.e. around 25 million euros, within three years of closing the transaction. According to a company spokesman, the management calculates with two thirds through direct savings and one third through sales synergies, i.e. because the combined offer of both companies improves sales opportunities. The takeover should also make a contribution to earnings per share in the first financial year after the transaction is completed.
For comparison: In the pre-Corona year 2019, LANXESS had achieved an operating profit of around one billion euros. In the virus crisis year 2020, based on the latest statements about a surprisingly strong final quarter, it should have been around 860 million euros. Details will be given when the annual figures are presented on March 11th.
For years, LANXESS boss Matthias Zachert has been aligning the group more and more towards specialty chemicals, which promise higher profit margins than the business with bulk and standard goods. In addition, business should then be more stable even in economically difficult times. The strategy also includes takeovers and sales of parts of the company.
The purchase of the French manufacturer of specialty fungicides for the packaging industry, Intace, was only announced in mid-January. In addition, the management is currently negotiating with the French manufacturer of disinfection and hygiene solutions Theseo. Both are rather smaller deals, but manager Zachert had also emphasized in recent months that a larger takeover – such as the billion-dollar purchase of Emerald Kalama that has now been announced – is possible in view of the “strong financial situation”.
Investors and analysts are likely to look at the deal with interest. They had reacted disappointed only a few days earlier after the Swiss pharmaceuticals supplier Lonza had sold its chemicals division to the financial investors Bain Capital and Cinven for 4.2 billion Swiss francs. Because: Previously, there had been speculation here about an interest from LANXESS.
According to analysts Sebastian Satz from Barclays Bank and Andreas Heine from Stifel Europe, the Lonza activities would have been a good fit for LANXESS. After all, given the price that financial investors are paying, Heine also referred to LANXESS’s discipline not to dig too deep for takeovers.
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Image sources: LANXESS