Lanxess to sell JV stake to Saudi Aramco

SPECIALTY chemicals group, Lanxess plans to sell its 50% share of Arlanxeo to its joint venture partner, Saudi Aramco.

The two companies signed an agreement today and the sale is now awaiting approval from the relevant antitrust authorities.

Arlanxeo is currently valued at €3bn (US$3.4bn), and Lanxess expects to receive €1.4bn for its stake after having covered related debts and other financial liabilities.

The venture is headquartered in Maastricht, the Netherlands, and produces high performance rubbers for use in vehicles, tyres, construction, and the oil and gas industries. In 2017 the company generated revenue of €3.2bn. It employs 3,800 employees at 20 production sites in nine countries.The companies had initially agreed upon a lock-up period until 2021, but the decision to sell now allows Lanxess to reduce its debt and continue with its strategic transformation. Lanxess proceeded with the joint venture in 2016 as part of a strategic realignment but has now decided to focus on the mid-sized specialty chemicals markets. It has made various acquisitions to this effect, the biggest being the 2017 takeover of US chemical company Chemtura.

Aramco, the world’s top exporter of crude oil and natural gas liquids, views the purchase as a key step in achieving its overarching downstream strategy.

“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,” said Abdulaziz M Al-Judaimi, Aramco's senior vice president of downstream.

The two companies aim to complete the sale by the end of the year, with Arlanxeo maintaining its current headquarters.