LANXESS plans to sell 50% of its shares in ARLANXEO to Saudi Aramco, a joint venture partner. In 2016, the two companies set up a synthetic rubber company, ARLANXEO, with a 50% investment in each.
The transaction is subject to approval by the relevant antitrust authorities. In addition, the two companies will hold consultations with relevant employee representatives and unions, and the transaction is expected to be officially completed by the end of 2018.
The total market value of the joint venture ARLANXEO is 3 billion euros. After deducting borrowings and other financial liabilities related to 50% of its shares, LANXESS expects to receive approximately 1.4 billion euros in cash in this transaction.
LANXESS plans to use the revenue to strengthen its financial base and reduce its net debt.
Initially, LANXESS and Saudi Aramco reached an agreement on the lock-up period to 2021. Chang Mutian, Chairman of the Board of Management of LANXESS, said: "This planned transaction marks another important milestone in the way we will reach a strategic transformation ahead of time, which will allow us to focus more on consolidation in the medium-sized specialty chemicals market. At the same time, we will also improve the resilience of our business, strengthen the financial foundation, and ensure greater strategic flexibility to prepare for future growth. "
Headquartered in Maastricht, the Netherlands, ARLANXEO has 20 production sites in 9 countries, and has approximately 3,800 employees. Its sales in 2017 were approximately 3.2 billion euros. The company mainly produces high-performance rubbers used in automotive tires, construction, and oil and gas industries.
In 2016, LANXESS laid the foundation for its own strategic adjustment plan by merging the synthetic rubber business into the joint venture, Aramco. Since then, LANXESS has been committed to developing a medium-sized specialty chemicals market and has completed multiple acquisitions in this area-the largest of which was the 2017 acquisition of Chemtura Chemical Corporation.