LANXESS makes first acquisition in India

LANXESS to acquire chemical businesses of Indian company Gwalior Chemical Industries for EUR 82.4 million
- Further milestone in LANXESS’ BRIC strategy
- 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

Mumbai, 9 June 2009 – The subsidiary of specialty chemicals group LANXESS AG, 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.

“This is our first acquisition in India and a further milestone in our company’s long-term growth strategy in BRIC countries,” said Axel C. Heitmann, Chairman of LANXESS’ Board of Management. “Gwalior’s business complements the portfolio of the Basic Chemicals business unit and will strengthen our production base in the exciting Indian market.”

Founded in 1978, Gwalior’s headquarter is based in Mumbai and employs about 400 permanent staff. In the first nine months of its business year 2008/2009 (end March 31), Gwalior achieved sales of approximately EUR 45.7 million and an above-peer EBITDA margin of approximately 18%.

“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, pharmaceutical as well as 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.

In addition to the acquisition of Gwalior, LANXESS announced today the takeover of the business and production assets of Jiangsu Polyols Chemical Co. Ltd. Both parties have agreed not to disclose the purchase price. Closing is expected in the third quarter of 2009. Jiangsu Polyols achieved sales of about EUR 10 million in 2008 and currently employs some 170 staff at a facility with competitive technology.

The Chinese medium-sized company mainly produces trimethylolpropane (TMP) that is used in lubricants, paints and coatings. LANXESS’ 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. “Today’s transactions follow on from our successful acquisition of Petroflex, one of the leading Latin American synthetic rubber companies.”

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.

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.

LANXESS achieved sales of EUR 115 million in India in 2008 and currently employs about 200 people. India is next to China the company’s most important market in Asia and an integral part of LANXESS’ BRIC strategy. Despite the global economic crisis, India is expected to grow by six percent this year, with a rising middle-class driving demand for chemicals. In 2008, LANXESS achieved sales of around EUR 385 million in China and currently employees about 900 people there. The BRIC countries represented about 16% of the company’s group sales in 2008.

LANXESS is a leading specialty chemicals company with sales of EUR 6.58 billion in 2008 and currently around 14,600 employees in 23 countries. The company is represented at 44 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals. More information at http://www.lanxessgoesasia.com

Forward-Looking Statements
This news release may contain forward-looking statements based on current assumptions and forecasts made by LANXESS AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Maggie Tan
Corporate Communications
LANXESS Pte Ltd
9 Benoi Sector, Singapore 629844
Tel       (65) 6725 5888
Direct   (65) 6725 5821
Fax      (65) 6264 5329
Email   maggie.tan@lanxess.com
Web: http://www.lanxess.com/ , http://www.lanxessgoesasia.com/

This release was published on openPR.