Specialty chemicals company Lanxess accelerates growth with the signing of a binding agreement to acquire 100% shares in Emerald Kalama Chemical.

WHO: US-based Emerald Kalama Chemical is a specialty chemicals company whose products include food preservatives, household and cosmetic applications, flavors and fragrances, as well as plastics and adhesives for the industry. The company employs approximately 500 employees worldwide and runs production sites in Kalama, Washington (US), Rotterdam (Netherlands), and Widnes (Great Britain).

Cologne, Germany-based chemicals group Lanxess is a globally leading manufacturer of specialty chemicals.

WHY: The transaction strengthens Lanxess’ specialty chemical portfolio, especially in the consumer protection segment, and would materially expand into the growth markets of food and animal nutrition.

IN THEIR OWN WORDS: “We are gaining further momentum on our growth course. The businesses of Emerald Kalama Chemical are an ideal fit for us. We will further strengthen our Consumer Protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America. All this will make us even more profitable and stable,” said Matthias Zachert, Chairman of the Board of Management of Lanxess.

“Emerald Kalama Chemical has a very efficient setup, bundling all its production activities at only three sites. That is why we expect to integrate the new business very quickly,” said Zachert.

DETAILS:

• Lanxess to acquire 100% shares in Emerald Kalama Chemical from affiliates of private equity firm American Securities LLC.
• The sale marks American Securities’ exit from Emerald Performance Materials, a diversified group it bought in 2014 and has broken up. Dystar Global Holdings purchased Emerald’s polymer additives unit in 2016, while Hutsman Corp. bought the resin-ingredients business earlier this year.
• In 2020, Emerald Kalama Chemical achieved sales of around $425 million and EBITDA pre-exceptionals of approximately $90 million.
• The enterprise value of Emerald Kalama Chemical amounts to $1.075 billion. After deducting debt-like items, the purchase price is around $1.04 billion, which Lanxess will finance from existing liquidity.
• Within three years following the completion of the transaction, Lanxess expects an additional annual EBITDA contribution of around $30 million from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion.
• Emerald Kalama Chemical generates around 45% of its turnover in North America, and generates about 75% of its turnover with specialties in the consumer segment, with the remaining 25% of sales coming from the specialty chemicals business.
• Emerald Kalama had also attracted interest from buyout firms HIG Capital, Rhone Capital, and TPG, according to Bloomberg.