LANXESS to acquire chemical businesses of Indian company Gwalior Chemical Industries Ltd for EUR 82.4 million / Assets of mid-sized Chinese company Jiangsu Polyols Chemical Co Ltd also to be acquired for an undisclosed sum / Acquisitions strengthen Basic Chemicals business unit.
Specialty chemicals group LANXESS AG is underpinning its long-term growth strategy in the BRIC countries with two acquisitions in Asia.
LANXESS subsidiary LANXESS India Private Ltd will acquire the chemical businesses and assets of stock market listed Indian company Gwalior Chemical Industries Ltd for EUR 82.4 million, including debt. A corresponding agreement was reached with the company. The transaction is subject to formal approval by Gwalior's shareholders and clearance by the relevant antitrust authorities. Closing is expected at the end of the third quarter of 2009.
LANXESS will also acquire the business and production assets of Chinese-based Jiangsu Polyols Chemical Co. Ltd. Both parties have agreed not to disclose the purchase price. Closing of this transaction is expected in the third quarter of 2009. The medium-sized company, which was founded in 2006, is located in Liyang, west of Shanghai.
"These acquisitions in India and China are further milestones in our company's long-term growth strategy in the BRIC countries," said Axel C. Heitmann, Chairman of LANXESS`s Board of Management. "Gwalior's business complements the portfolio of our Basic Chemicals business unit and our first acquisition in India will strengthen our production base in this exciting market."
Founded in 1978, Gwalior's headquarters are based in Mumbai and employs about 400 permanent staff. In the first nine months of its business year 2008/2009 (end March 31), the Indian company achieved sales of approximately EUR 45.7 million and an above-peer EBITDA margin of approximately 18 percent.
"We are delighted to have reached this landmark transaction. We are convinced that the business as well as employees will go from strength to strength under the new management of LANXESS," said Ashwin Kothari, Chairman of Gwalior Chemical Industries Ltd.
Gwalior is one of the largest Indian producers of benzyl products and one of the leading global producers of sulphur chlorides for the agrochemicals and pharmaceuticals as well as for the flavor and fragrance industries. Its production sites are in Nagda, Madhya Pradesh state, and in Ankleshwar, Gujarat state. In the future, production will be concentrated at the modern Nagda site, which is currently expanding capacities.
LANXESS will acquire Gwalior's chemical businesses. The acquisition will be financed out of existing liquidity. The transaction is expected to be EPS accretive as of 2010.
Jiangsu Polyols achieved sales of about EUR 10 million in 2008 and currently employs some 170 staff at a facility with competitive technology. It mainly produces trimethylolpropane (TMP) that is used in lubricants, paints, and coatings. LANXESS's business unit Basic Chemicals is already a major supplier of TMP in China and will integrate Jiangsu into its global operations.
With some 1,000 employees worldwide, the LANXESS Basic Chemicals business unit is one of the leading manufacturers of raw materials for agrochemicals, polymers, surface coatings, and pigments. It operates several production sites in Germany, China, and the United States. The Basic Chemicals business unit belongs to the Advanced Intermediates segment, which achieved total sales in 2008 of EUR 1.3 billion. The segment has proven to be one of LANXESS' more stable businesses in the economic crisis due to its exposure to the agrochemical industry.
"We have always stated in the past that we are on the look out for small or medium-sized assets that will create value for LANXESS and are a strategic fit for our portfolio," added Heitmann. "These two transactions follow on from our successful acquisition of Petroflex, one of the leading Latin American synthetic rubber producers."
LANXESS has a growing presence in India. The headquarters are located in Thane, Maharashtra state, and there is a production site in Madurai, Tamil Nadu state, for leather chemicals, material protection products and the company's wholly-owned subsidiary Rhein Chemie. LANXESS is also building a new production facility for ion exchange resins and relocating its rubber chemicals site from Thane to Jhagadia, Gujarat state. This project will be completed by 2010 and has an investment volume of roughly EUR 50 million.