Excellently Positioned Synthetic Rubber Company

LANXESS and Saudi Aramco plan to establish a joint venture for synthetic rubber. LANXESS and the Saudi Aramco subsidiary, Aramco Overseas Company, will each hold a 50 % interest in the joint venture, with annual sales of approximately three billion Euro in 2014. Saudi Aramco is to pay approx. EUR 1.2 billion in cash for its 50 % share after deducting debt and other financial liabilities. The total joint venture is valued at EUR 2.75 billion. The transaction still requires the approval of the relevant antitrust authorities and is expected to be completed in the first half of 2016.

The joint venture brings together the world’s largest producer of synthetic rubber and the world’s largest oil and energy producer to form a far-reaching strategic partnership. LANXESS will contribute its synthetic rubber business to the new joint venture. This will include the Tire & Specialty Rubbers (TSR) and the High Performance Elastomers (HPE) business units, their 20 production facilities in nine countries and some 3,700 employees and additional support staff. Saudi Aramco will provide the joint venture with competitive and reliable access to strategic raw materials over the medium term.

The joint venture will be managed by a holding company headquartered in the Netherlands. The CEO will be appointed by LANXESS and the CFO will be appointed by Aramco Overseas Company. Each company will have equal representation on the JV’s board of directors. LANXESS will consolidate the JV’s financials.

LANXESS plans to use around EUR 400 million of the proceeds from the transaction to invest in the growth of the well-positioned and less cyclical segments Advanced Intermediates and Performance Chemicals. Another roughly EUR 400 million is earmarked for a further reduction of its financial debt position and around EUR 200 million are planned to be used for a share buyback program.

^{Matthias Zachert, Chairman of the Board of Management of LANXESS AG (right), and
Abdulrahman F. Al-Wuhaib, Senior Vice President Downstream of Saudi Aramco,
signed the agreement on the new Joint Venture in Cologne, Germany. Photo: LANXESS AG}