Speciality chemicals company LANXESS is accelerating its growth course and signed a binding agreement to acquire 100% shares in Emerald Kalama Chemical on February 14, 2021. The US-based company is a leading global manufacturer of speciality chemicals, especially for the consumer segment, and is majority-owned by affiliates of the US private equity firm American Securities LLC.
The enterprise value of Emerald Kalama Chemical amounts to US$1.075bn. After deducting debt-like items, the purchase price is around US$1.04bn (€867M*), which LANXESS will finance from existing liquidity. The transaction is expected to be completed in the second half of 2021. It is still subject to approval by the relevant authorities.
In 2020, Emerald Kalama Chemical achieved sales of around US$425M and EBITDA pre exceptionals of approximately US$90M. Within three years following the completion of the transaction, LANXESS expects an additional annual EBITDA contribution of around US$30M (€25M*) from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion.
“We are gaining further momentum on our growth course. The businesses of Emerald Kalama Chemical are an ideal fit for us. We will further strengthen our Consumer Protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America. All this will make us even more profitable and stable,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG.
Emerald Kalama Chemical employs approximately 500 employees worldwide and runs production sites in Kalama, Washington (USA), Rotterdam (Netherlands) and Widnes (Great Britain). The company generates around 45% of its turnover in North America. “Emerald Kalama Chemical has a very efficient setup, bundling all its production activities at only three sites. That is why we expect to integrate the new business very quickly,” said Zachert.
Emerald Kalama Chemical generates about 75% of its turnover with specialities in the consumer segment. These include preservatives for food, household and cosmetic applications, flavours and fragrances, as well as products for animal nutrition. The remaining 25% of sales come from the speciality chemicals business for industrial applications, including the plastics and adhesives industries.
With the acquisition, LANXESS is pursuing a targeted expansion of its portfolio: The company has a strong position in the global business with antimicrobial active ingredients and preservatives, including for consumer protection products and animal hygiene. Examples are disinfectants effective against the Coronavirus or the African Swine Fever.
*Based on exchange rate of €/US$ = 1.20.