Leveraging part of the €1.4 billion proceeds from the sale of its 50% stake in synthetic rubber producer Arlanxeo to Saudi Aramco, German specialty chemicals producer Lanxess has launched a share buyback program.

Using the authorization granted by its annual general meeting in May 2016, the Cologne-based company said it wans to acquire around 4.5 million of its own shares valued at up to €200 million (excluding incidental costs) via the stock market.

Based on the current share price, Lanxess would buy back almost 5% of its share capital.

The stock purchases were planned to begin on Jan. 14 at the earliest and be completed at the latest by on Dec. 31, 2019. The acquired shares are to be redeemed. 

Michael Pontzen, Lanxess’ chief financial officer, said the buyback is intended to create value for shareholders in the “currently challenging capital market.”

Lanxess’ German pension assets will also receive an injection of cash, totaling about €200 million.

At the end of the 2018 third quarter, the company’s now proportionately reduced pension provisions totaled €1.247 billion. This additional capital will increase the funding status of group-wide pension obligations from around 49% currently to about 58 %, based on the Sept. 30, 2018 status.

The pension scheme is an integral part of Lanxess’ corporate philosophy, said Pontzen.