Aramco to buy remaining 50pc of JV with Lanxess
(8/9/2018 7:14:00 AM)
Specialty chemicals group Lanxess plans to sell its remaining 50 percent stake in Arlanxeo to its joint venture partner Saudi Aramco, a world-leading integrated energy and chemicals company.
The two companies, that founded Arlanxeo in 2016 as a 50:50 joint venture for synthetic rubber, signed an agreement regarding the stake sale today.
Saudi Aramco’s proposed purchase of the share in Arlanxeo, valued at €1.5 billion ($1.74 billion) on an enterprise value basis, would result in Saudi Aramco owning 100% of Arlanxeo, diversify Saudi Aramco’s downstream portfolio at an opportune time, and strengthen Saudi Aramco’s capabilities across the entire petroleum value-chain, said Aramco.
The proposed transaction has been approved by the boards of directors of both Saudi Aramco and Lanxess. Subject to the receipt of all regulatory approvals and consultation with the competent employee representative bodies, Saudi Aramco and Lanxess are targeting December 31, 2018 for the completion of the transaction.
Saudi Aramco's senior vice president of downstream, Abdulaziz M Al-Judaimi, noted that the proposed acquisition is key to Saudi Aramco’s strategy to become the world’s foremost integrated energy and chemicals company.
“The proposed purchase underscores Saudi Aramco’s strategy to further diversify our downstream portfolio and strengthen our capabilities across the entire petroleum and chemicals value chain. Notably, the acquisition will accelerate our growth into C4-based chemicals including butadiene and isobutylene,” Al-Judaimi said.
Arlanxeo is a world-class synthetic rubber and elastomer products company that supplies leading tyre and auto-parts to manufacturers around the globe. As a fully owned subsidiary of Saudi Aramco, Arlanxeo will accelerate the development of growth opportunities in the kingdom, leveraging the strong feedstock position of Saudi Aramco.
In addition, Arlanxeo will enhance Saudi Aramco’s sustainability efforts to optimise tyre performance-related fuel consumption, which could potentially result in a savings of as much as seven percent. This will complement Saudi Aramco‘s fuel/engine R&D strategy, which is focused on increasing mileage efficiency and reducing engine emissions in the future. This is well aligned with Saudi Aramco’s overarching downstream strategy, which aims to drive value across the hydrocarbon chain by expanding and integrating its portfolio and partnerships, and creating additional revenue streams, Aramco said. Under Saudi Aramco’s 100% ownership, Arlanxeo will continue to serve the development, production, marketing, sale and distribution of specialty chemicals and synthetic rubber products, principally for the high-volume global tyre and automotive industries. Arlanxeo will maintain its current base in Maastricht, the Netherlands.
“With the envisaged transaction we would complete another important milestone of our strategic transformation earlier than originally planned. This should allow us to even better focus on our position as a leading player in mid-sized specialty chemicals markets,” said Matthias Zachert, chairman of the board of management, Lanxess. “At the same time, we increase the resilience of our business, strengthen our financial basis and gain additional strategic flexibility for further growth."
Arlanxeo generated sales of around €3.2 billion in 2017 and employs about 3,800 people at 20 production sites in nine countries. Lanxess is a leading specialty chemicals company with sales of €9.7 billion in 2017 and about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics.