German specialty chemicals group Lanxess says it plans to sell its remaining 50 percent stake in Arlanxeo to its joint venture partner Saudi Aramco. The two companies, that founded Arlanxeo in 2016 as 50-50 joint venture for synthetic rubber, signed a respective agreement today.

The Netherlands-headquartered Arlanxeo is a leading synthetic rubber company and posted sales revenue of around 3.2 billion euro (Rs 24,461 crore) in 2017. The company has employee strength of around 3,800 and has a global presence with 20 production sites spread across 9 countries. The company’s core business is the development, manufacturing and marketing of synthetic high-performance rubber for use in the automotive and tire industries, the construction industry, and the oil and gas industries.

Lanxess says the transaction is subject to approval of the relevant antitrust authorities, and simultaneously the information/consultation of the competent employee representative bodies will take place. The parties expect to complete the envisaged transaction by the end of 2018. The JV is valued at 3.0 billion euro (Rs 22,932 crore), and Lanxess expects to receive approximately 1.4 billion euro (Rs 10,702 crore) in cash after deducting debt and other financial liabilities for its 50 percent share. It plans to use the proceeds to strengthen its financial basis and reduce net financial debt. Originally, the partners had agreed on a lock-up period until 2021.

Matthias Zachert, Chairman of the Board of Management, Lanxess, said: “With the envisaged transaction we would complete another important milestone of our strategic transformation earlier than originally planned. This should allow us to even better focus on our position as a leading player in mid-sized specialty chemicals markets. At the same time, we increase the resilience of our business, strengthen our financial basis and gain additional strategic flexibility for further growth.“