Sector News

Lanxess acquires Chemours' disinfectants business for €210 million

April 25, 2016
Chemical Value Chain

Lanxess said on Monday that it is taking over the ‘clean and disinfect’ business of Chemours. The operation comprises active ingredients as well as specialty chemicals used in disinfectant and hygiene solutions.

One of its core products is the Virkon S branded disinfectant, that is being deployed globally in the veterinary disinfection sector and in combat against major diseases such as foot-and-mouth and avian influenza. The two companies have signed an acquisition agreement.

The enterprise value of around €210 million ($236.3 million) will be paid by Lanxess from existing liquidity, the company says. Closing is expected in the second half of 2016, subject to approvals from relevant antitrust authorities. The acquisition will be earnings per share accretive in the first fiscal year and the acquired business is expected to generate an annual Ebitda contribution of around €20 million, which will increase gradually with synergy effects to roughly €30 million by 2020.

Lanxess is taking over 170 Chemours’ employees and three production sites at Memphis and North Kingstown, Rhode Island in the United States, and Sudbury, United Kingdom. In 2015, the business achieved sales of around €100 million, roughly half of which was in North America.

The deal is Lanxess’s first acquisition after completion of its realignment program. “We plan to enhance our position particularly in mid-sized, less cyclical markets with high margins and sound growth prospects,” said Matthias Zachert, chairman of Lanxess. “We have made quick headway and are now expanding our specialty chemicals portfolio which will make us more profitable and more resilient. Through the acquisition, we will grow especially in the region of North America, where we still see good opportunities,” Zachert says. Lanxess recently hived off its synthetic rubber business, the largest producer in the world, into Arlanxeo, an equally owned joint venture with Saudi Aramco.

The acquired operation will be integrated into Lanxess’s material protection products business unit. “With the acquisition of Chemours’ clean and disinfect business, we are not only expanding our portfolio of active ingredients, but are also able to establish a forward integrated value chain in the veterinary disinfection segment,” said Michael Schäfer, head of the material protection products business unit.

The business comprises three segments: disinfectants, potassium monopersulfate and chlorine dioxide. Each segment holds leading positions worldwide and serves attractive markets that benefit from growth trends, Lanxess says. The disinfectants segment focuses on providing solutions for veterinary disinfection. Its core product is powder disinfectant marketed under the Virkon S brand and is used to combat a multitude of viruses, bacteria and fungi, particularly in combating the foot-and-mouth and swine vesicular diseases as well as avian influenza. Potassium monopersulfate, sold under its core brand of Oxone, is used for pool and spa applications, in personal care, the electronics industry and as active ingredient in the formulation of disinfection products, especially Virkon branded products. The chlorine dioxide segment is an established provider of package solutions for industrial water treatment.

Lanxess’s material protection products unit employs around 350 people and operates production sites at Krefeld-Uerdingen and Dormagen, Germany; Pittsburgh, US; Jhagadia, India; Changzhou, China; and Singapore. It forms part of the performance chemicals segment, which generated sales of roughly €2.1 billion in 2015.

By Natasha Alperowicz

Source: Chemical Week

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