LANXESS takes over Chemours’ Clean and Disinfect specialities business

Specialty chemicals company LANXESS is expanding its portfolio of material protection products by taking over the Clean and Disinfect business of US-based chemical company Chemours. The business comprises active ingredients as well as specialty chemicals used especially in disinfectant and hygiene solutions. One of its core products is the Virkon S branded disinfectant, that is being deployed globally in the growth sector of veterinary disinfection and in the combat against major diseases such as Foot-and-Mouth disease or Avian Influenza.

Both companies have now signed an acquisition agreement. The enterprise value of around EUR 210 million will be paid by LANXESS from existing liquidity. Closing is expected in the second half of 2016. The transaction is still subject to approval from the relevant antitrust authorities.

The acquisition will be earnings per share (EPS) accretive in the first fiscal year. The acquired business is expected to generate an annual EBITDA contribution of around EUR 20 million, which will increase gradually with synergy effects to roughly EUR 30 million by 2020.

The deal is LANXESS’ first acquisition after the completion of its realignment program. “We plan to enhance our position particularly in mid-sized, less cyclical markets with high margins and sound growth prospects,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG. “We have made quick headway and are now expanding our specialty chemicals portfolio which will make us more profitable and more resilient.”

LANXESS takes over Chemours‘ Clean and Disinfect business with 170 employees worldwide and three production sites in Memphis and North Kingstown, USA, and Sudbury, United Kingdom. In 2015, the business achieved sales of around EUR 100 million, roughly half of which in the region of North America. “Through the acquisition, we will grow especially in the region of North America, where we still see good opportunities,” said Zachert.

The new business will be integrated into LANXESS’ Material Protection Products business unit. “With the acquisition of Chemours’ Clean and Disinfect business, we are not only expanding our portfolio of active ingredients, but are also able to establish a forward integrated value chain in the veterinary disinfection segment,” said Michael Schäfer, head of the Material Protection Products business unit. “Above, we will benefit from Chemours’ experienced and dedicated employees, its strong technical and regulatory expertise, its widely recognized brands and well-established distribution networks.”

Clean and Disinfect: Three segments with leading positions

Chemours’ Clean and Disinfect business is comprised of three segments: disinfectants, potassium monopersulfate and chlorine dioxide. Each segment holds leading positions worldwide and serves attractive markets that benefit from intact growth trends. Above all, the global veterinary disinfection segment is expected to grow by 6 percent annually (CAGR 2015-2020).

The segment of disinfectants focuses on providing solutions for veterinary disinfection. Its core product, the globally leading powder disinfectant marketed under the brand name Virkon S, has proved to be successful against a multitude of viruses, bacteria and fungi. It is deployed, among others, to combat major diseases such as Foot-and-Mouth disease, Swine Vesicular disease or Avian Influenza.

The second segment deals with the production and distribution of the active ingredient potassium monopersulfate with its core brand Oxone. It is used for pool and spa applications, in personal care, in the electronics industry and as active ingredient in the formulation of disinfection products, especially in Virkon branded products.

The chlorine dioxide segment is an established provider of package solutions for industrial water treatment.

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