German specialty chemicals company Lanxess aims to accelerate its growth course and has signed a binding agreement to acquire 100 percent shares in US-based Emerald Kalama Chemical, which is a globally leading manufacturer of specialty chemicals, especially in the consumer segment.
The enterprise value of Emerald Kalama Chemical amounts to $1.075 billion (Rs 7,956 crore). After deducting debt-like items, the purchase price is around $1.04 billion (Rs 7,697 crore), which Lanxess will finance from existing liquidity. The transaction is expected to be completed in the second half of 2021. It is still subject to approval by the relevant authorities.
In 2020, Emerald Kalama Chemical achieved sales of around $425 million (Rs 3,145 crore) and EBITDA pre-exceptional of approximately $90 million (Rs 666 crore). Within three years following the completion of the transaction, Lanxess expects an additional annual EBITDA contribution of around $30 million (Rs 222 crore) from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion.
Matthias Zachert, chairman, Board of Management of Lanxess said: “We are gaining further momentum on our growth course. The businesses of Emerald Kalama Chemical are an ideal fit for us. We will further strengthen our Consumer Protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America. All this will make us even more profitable and stable.”
Emerald Kalama Chemical generates about 75 percent of its turnover with specialties in the consumer segment. These include preservatives for food, household and cosmetic applications, flavours and fragrances as well as products for animal nutrition. The remaining 25 percent of sales come from the specialty chemicals business for industrial applications, including the plastics and adhesives industries.