Lanxess and Royal DSM N.V. have reached an agreement in principle involving the sale of DSM Elastomers to Lanxess for €310 million on a cash and debt-free basis. DSM Elastomers produces the synthetic rubber ethylene propylene diene monomer (EPDM) under the brand name Keltan. The price for the DSM Elastomers business represents an EBITDA multiple of roughly 6 based on the expected EBITDA of 2010. The acquisition will be financed by Lanxess out of existing liquidity and is expected to be EPS accretive as of 2011. The transaction contracts will be finalized once a consultation process with the employees' representatives of DSM in the Netherlands has been completed. The transaction is subject to approval from antitrust authorities. Closing is expected in the first months of 2011.
“We look forward to welcoming DSM’s professional EPDM team as well as its impressive assets to our core synthetic rubber activities,” said Axel C. Heitmann, Lanxess CEO. “The transaction will also be an important step towards our goal of achieving roughly €1.4 billion EBITDA pre exceptionals in 2015.” Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: “The sale of DSM Elastomers completes our Vision 2010 strategy to become a focused Life Sciences and Materials Sciences company. This transformation has been achieved within our desired timeframe and at favorable conditions for our shareholders and employees. DSM has now entered a new era focused on driving growth and returns with enhanced earnings quality and confidence in meeting our medium-term targets.”
The global rubber market for EPDM is expected to show single-digit percentage growth per annum in the next ten years, driven by rising demand in China and Brazil. Through the transaction, Lanxess plans to strengthen its technology base by gaining access to the ACE technology. DSM is in the process of implementing this technology on a larger scale at its site in Sittard-Geleen. In comparison to conventional technology, ACE reduces the energy and production costs for EPDM and at the same time broadens the application possibilities of the rubber. Lanxess will evaluate implementing ACE technology into its existing plants.
Apart from EPDM products, TRP’s portfolio include Polychloroprene rubber (CR), Hydrogenated nitrile rubber (HNBR), Ethylene vinyl acetate rubbers (EVM) and Nitrile Rubber (NBR). TRP is part of Lanxess’ Performance Polymers segment, which recorded sales of EUR 2.4 billion in 2009. Apart from Marl and Orange, the business unit has production sites in Leverkusen, Dormagen (both Germany) and La Wantzenau (France).