Germany’s specialty chemicals group, Lanxess stated it intends to trade off its remaining 50% stake in Arlanxeo to Saudi Aramco, its JV partner. The agreement was signed by both the companies who founded 50-50 joint venture, Arlanxeo in 2016 for producing synthetic rubber.
Netherland based Arlanxeo is a leading synthetic rubber company that reported a sales revenue of around 3.2 Billion euro in the previous. The company presently has 3,800 employees and 20 production sites based in 9 different countries. The core business of the company is the manufacturing, development, and marketing high-performance synthetic rubber that are applicable in tire and automotive industries, oil and gas industry, and construction sector.
Lanxess stated that the transaction will go through an approval process of particular antitrust authorities, and later the consultation of employee delegate bodies will come into action. Both the parties are looking ahead to accomplish the deal by this year-end. The joint venture is estimated at 3 billion euro, in which Lanxess anticipates 1.4 billion euro as it shares in cash after subtracting the financial liabilities and debts for the 50% share. The company plans to utilize the funds to fortify its financial capabilities and lower the financial debts. Generally, in terms of the deal, the partners had decided a confined period till 2021.
Lanxess Chairman of the Board of Management, Matthias Zachert stated, “With this foreseen transaction, we would be able to accomplish another crucial milestone that is in line with our strategic transformation. This would enable us to emphasize on our rankings as dominating player in the mid-sized chemical market, particularly in specialty segment. Simultaneously, we are strengthening our financial basis, the resilience of our business, and achieve strategic flexibility for future growth.”
However, with this latest stake sale plan of the one of the leading chemical industry player, the chemical market is anticipated to witness some uncertainties in its growth ratio.