Saudi Aramco says it is buying out its German partner Lanxess from a synthetic rubber joint venture called Arlanxeo
Energy giant Saudi Aramco is buying out its German partner Lanxess from a synthetic rubber joint venture called Arlanxeo in a €1.4 billion ($1.62 billion) deal.
The sale remains subject to regulatory approval and expected to take place by the end of 2018.
The move comes just two years after the 50-50 joint venture was signed with a lock-up period until 2021, marking an early exit for Lanxess. The €6bn company was set up in 2005 after the spin-off of German pharmaceuticals firm Bayer.
It is aimed at improving Lanxess’ finances in line with its acquisition of US chemical firm Chemtura for €2.4bn last year.
The sale of its stake sale in Arlanxeo, the venture that is valued at around €3bn, will help it secure cash and cover its debt.
CEO Matthias Zachert said the company aims at focusing on being a leading player in mid-sized specialty chemicals markets.
Saudi Aramco is currently in talks to acquire a major stake in the kingdom’s petrochemicals giant SABIC. The move – as well as the purchase of the Lanxess stake - is set to accelerate the development of growth opportunities in the Kingdom, according to the company.
Arlanxeo, which reported €3.2bn in sales in 2017, specialises in high-performance rubber used in construction, automotive and tyre industries. It runs approximately 20 production sites in nine countries and employs around 3,800 people.
The sale announcement led Lanxess shares to rise over 4%.