Lanxess selling Arlanxeo stake to Saudi Aramco

Cologne. Germany – Lanxess plans to sell its remaining 50% stake in Arlanxeo to its joint venture partner Saudi Aramco, the companies announced 8 Aug.

The two companies, that founded the 50:50 synthetic rubber JV in 2016, signed a respective agreement 8 Aug.

With the Arlanxeo JV valued at €3.0 billion, Lanxess said it expects to receive around €1.4 billion in cash after deducting debt and other financial liabilities for its 50% share.

Completion is expected by the end of 2018, though Lanxess said the transaction requires approval by antitrust authorities and that consultations with employee representative bodies are also to take place.

If the deal is finalised, Lanxess said it plans to use the proceeds to strengthen its financial basis and reduce net financial debt.

Saudi Aramco said the deal would diversify its downstream portfolio at an opportune time and strengthen its capabilities across the entire petroleum value-chain.

In particular, the deal will accelerate Saudi Aramco's growth into C4-based chemicals, including butadiene and isobutylene, according to Abdulaziz M. Al-Judaimi, senior vice president of downstream, and enhance Saudi Aramco's sustainability efforts to optimise tire performance-related fuel consumption.

In establishing Arlanxeo, the two partners originally agreed on a lock-up period until 2021 for the JV.

“With the envisaged transaction we would complete another important milestone of our strategic transformation earlier than originally planned,” said Matthias Zachert, chairman of Lanxess.

“This should allow us to even better focus on our position as a leading player in mid-sized specialty chemicals markets,” added Zachert.

Headquartered in Maastricht, The Netherlands, Arlanxeo generated 2017 sales of around €3.2 billion. It employs about 3,800 people at 20 production sites worldwide, producing synthetic rubber for industries including automotive, tires, construction and oil & gas.