LANXESS and Advent International are establishing a joint venture for high-performance engineering polymers through the acquisition of the DSM Engineering Materials business (DEM) from Dutch group Royal DSM, which will become part of the new joint venture.
LANXESS
Engineering plastics JV for LANXESS and Advent International
At its site in Krefeld, LANXESS manufactures products such as pigments, high-performance plastics and specialty chemicals.
DEM is one of the leading global suppliers in high-performance specialty materials that address key market needs in electronics, electrical and consumer goods.
LANXESS will contribute its High Performance Materials (HPM) business unit to the joint venture. This JV aims to improve LANXESS’ business portfolio, which will consist of three specialty chemicals segments once the transaction is complete. LANXESS will use the proceeds of the transaction to reduce debt and to strengthen its balance sheet.
LANXESS will have the opportunity to divest its stake in the joint venture to Advent at the same valuation after three years. EBITDA could then be significantly higher than today as Advent and LANXESS anticipate substantial synergies resulting from the combination of the two businesses.
The transaction is still subject to approval.
LANXESS CEO Matthias Zachert said: “With the new joint venture, we are forging a strong global player in the field of high-performance polymers. The portfolios, value chains and global positioning of the two businesses complement each other perfectly. With its innovative products, the joint venture will be able to play a key role in shaping future developments - for example in the field of electromobility. In Advent, we have a strong and reliable partner with profound experience in the chemical industry and our customer industries.”
Ronald Ayles, Managing Partner at Advent International, added: “Together we plan to bring the experience, deep sector know-how, and financial resources to make the joint venture a global success story for everyone involved. The combination of LANXESS’ High Performance Materials (HPM) and DSM Engineering Materials (DEM) creates a strong platform and brings together extensive expertise, resulting in the best opportunities for employees and more value for customers.”
DSM’s Engineering Materials business comprises polyamides (PA6, PA66) as well as various specialty materials (PA46, PA410 and specialty polyesters as well as PPS).
LANXESS’ High Performance Materials (HPM) business unit is one of the leading producers of PA6 and PBT engineering polymers and thermoplastic fiber composites.
The automotive industry, where lightweight elements can replace metal parts, is a focus customer sector for the new joint venture and represents an important growth area in, for example, electromobility.