Sector News

Warren Buffett's group acquires stake in Lanxess

May 30, 2017
Chemical Value Chain

Lanxess shares have soared in Frankfurt after it announced that Warren Buffett’s General Reinsurance AG had bought a stake of just over 3%, making the US investor among its top six shareholders.

General Re is a subsidiary of Buffet’s master company, Berkshire Hathaway Inc., a multi-industry conglomerate. Buffett, Berkshire’s chairman and largest shareholder, is regarded as the world’s most successful investor and the world’s fourth richest person.

Lanxess shares have risen nearly 9% since Buffett’s investment was disclosed to the stock exchange on Monday, adding about €510 million ($568.8 million) to the German company’s market capitalization. Analysts estimate that General Re paid about €173 million for the stake, which is a big endorsement of Lanxess’s value and strategy, they say. Before the Buffett stake was announced, Lanxess shares had fallen 8% since 11 May, when CEO Matthias Zachert said he expected growth rates to slow in the second half. The General Re shareholding reached the 3% disclosable threshold on 19 May.

Lanxess, under Zachert, has undergone major restructuring. The company, the world’s largest synthetic rubber producer, was hit by a downturn in that market and has since sold a 50% stake in its business to Saudi Aramco. In April this year, Lanxess completed the acquisition of Chemtura for €2.4 billion, broadening its portfolio in additives for flame retardants and lubricants as well as in urethane polymers and organometallics. The deal has also considerably strengthened its presence in the growing North American region. Lanxess says that more strategic steps could be in the offing in the second half of this year.

Lanxess is the US conglomerate’s first investment in chemicals outside North America, where its subsidiaries include the speciality chemicals maker Lubrizol and the paints manufacturer Benjamin Moore. According to Bloomberg, Lanxess’s biggest shareholders are Allianz SE, Blackrock and Norway’s sovereign wealth fund, with stakes ranging from 5-6%.

By Natasha Alperowicz

Source: Chemical Week

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