Lanxess sells 50 percent in rubber business Saudi Aramco

Lanxess sells 50 percent in rubber business to Saudi Aramco

12:11 PM, 23rd September 2015
Lanxess sells 50 percent in rubber business to Saudi Aramco
Matthias Zachert, CEO, Lanxess. (File photo)

FRANKFURT, GERMANY: Germany’s Lanxess AG sold 50 percent of its synthetic-rubber business, the world’s largest, to Saudi Aramco, partnering with the leading oil firm to gain better access to petrochemical raw materials.

The deal values the joint venture that the two companies will set up in the Netherlands at €2.75 billion ($3.1 billion) and operational control will be assumed by Lanxess, the German group said in a statement on Tuesday.

State oil company Saudi Aramco, which has been branching out into more advanced chemicals, will buy the stake for around €1.2 billion in cash.

Lanxess chief executive Matthias Zachert said teaming up with a supplier of petrochemicals used in synthetic rubber meant following the example of its main rivals and this would cut exposure to swings in that market.

Lanxess was the last among the world’s 10 largest rubber groups that had no affiliation with either a supplier of petrochemical raw materials or with a tyre group, Zachert said on a call.

“But we’re drawing level with phenomenal firepower. The number one in rubber is merging with the number one in energy.”

Its competitors in synthetic rubber include Exxon Mobil , which is working with Sabic, Eni’s chemicals arm Versalis and Michelin collaborating with Indonesian petrochemical company Chandra Asri.

Sources have told the news agency that Lanxess also held talks with European petrochemicals group Ineos, Russia’s NKNK and Sibur.

The search for a strategic partner for the German group’s synthetic rubber business, the world’s largest with about €3 billion in sales, began more than a year ago as the company sought to combat oversupply in the industry.

Lanxess shares extended gains on the news and were up 3.1 percent at 1245 GMT as market participants applauded the price.

© Reuters News

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