Lanxess to Acquire Emerald Kalama Chemical
Germany’s Lanxess has signed a binding agreement to acquire 100% of Emerald Kalama Chemical from affiliates of private equity firm American Securities. The US specialty chemicals producer focused mainly on consumer markets last reported sales of $425 million and EBITDA pre-exceptionals of $90 million. Closing is expected in the second half of 2021, subject to regulatory approval.
The Cologne-based specialty chemicals producer is paying $1.04 billion (€867 million) for the California company that specializes mainly in preservatives for food, household and cosmetic applications as well as flavors and fragrances and products for animal nutrition. The remaining 25% is focused on industrial applications, including plastics and adhesives. About 45% of sales revenue comes from North America.
Lanxess will finance the acquisition from existing liquidity. The purchase price reflects an enterprise value of $10.75 billion before deduction of “debt-like” items. The purchase is expected to be accretive to per-share earnings in the first business year. An additional annual EBITDA contribution of around $30 million is expected to result from synergy effects.
Emerald Kalama Chemical employs around 500 people. With all production activities concentrated at three sites in the US (Kalama, Washington), the Netherlands (Rotterdam) and the UK (Widnes), Lanxess CEO Matthias Zachert said the subsidiary of Emerald Performance Materials has a “very efficient setup.” Thus, he said, “we expect to integrate the new business very quickly.”
As well as US company being “an ideal fit for us,” the integration of the new business will keep Lanxess on its growth course, further strengthening its consumer protection segment and opening up new application areas with strong margins, for example in the food industry and animal health sector, Zachert said. At the same time he said the German player will expand its presence in its growth region of North America. “All this will make us even more profitable and stable.”
Author: Dede Williams, Freelance Journalist
