Lanxess to buy Emerald Kalama for US$1.075b

Cologne

LANXESS agreed to buy Emerald Kalama Chemical for an enterprise value of US$1.075 billion, adding a maker of specialty chemicals used in foods and cosmetics to its stable, and expanding further into North America.

The Cologne, Germany-based chemicals group is buying Emerald, which employs about 500 people and reported sales last year of US$425 million, from private equity firm American Securities, the company said in a statement early Sunday local time.

Emerald Kalama had also attracted interest from buyout firms HIG Capital, Rhone Capital and TPG, Bloomberg News reported in December.

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 Huntsman bought the resin-ingredients business earlier this year.

For Lanxess, the deal meets chief executive officer Matthias Zachert's appetite for higher-margin specialty chemicals.

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The transaction also suggests industrial companies are eyeing mergers in advance of developed economies starting to reopen in the second half as the coronavirus pandemic wanes. The value of all deals year-to-date in North America, at US$710 billion, is 39 per cent higher than in the same period a year earlier, according to data compiled by Bloomberg. Emerald Kalama generates 45 per cent of its revenue in the region, while Lanxess makes about 23 per cent.

Lanxess shares have outperformed other European chemical rivals since March last year, when the pandemic began to take root on the continent. The German company has climbed 67 per cent in the period, almost twice as much as the Stoxx 600 Chemicals Index. BLOOMBERG