Coverage: Lanxess to buy Chemtura for more than $2 billion

German specialty chemicals company Lanxess AG agreed to buy Chemtura Corp., a U.S.-based maker of lubricant additives and flame retardants, for about $2.12 billion in cash.

Kevin Miller and Jack Kaskey of Bloomberg News had the details:

Lanxess agreed to pay $33.50 a share, creating an enterprise value of about 2.4 billion euros ($2.7 billion), Cologne-based Lanxess said in a statement Sunday. The per-share offer is 19 percent higher than Philadelphia-based Chemtura’s close at $28.18 on Sept. 23. Pending approvals, the deal would close in the middle of next year, Lanxess said.

Management Board Chairman Matthias Zachert has been turning his attention to growing Lanxess’ chemical units since jettisoning its large rubber operations to a joint venture in April. That meshed neatly with the goals of Chemtura Chief Executive Officer Craig Rogerson, who had been evaluating a potential sale since last year.

Rogerson previously oversaw the sale of units that make pool chemicals and pesticides, cutting revenue in half. Chemtura shares had risen 3.3 percent this year through Friday, while Lanxess gained 14 percent to 48.70 euros.

Stephen Nakrosis of The Wall Street Journal said the deal combines their lubricants and flame retardant operations:

Lanxess said combining the two companies would expand its business activities in additives for lubricants and flame retardants. Lanxess said the value of the deal works out to about $33.50 per share of Chemtura. That represents an 18.9% premium to the stock’s closing share price of $28.18 on Sept. 23, Chemtura said.

Lanxess, based in Cologne, Germany, intends to fund the deal using existing liquidity and issuing new debt. The company said it has secured bridge financing, which will quickly be refinanced via senior bonds and a hybrid bond. The deal is expected to close around mid-2017.

Lanxess also said its announced share buyback of around €200 million won’t be pursued further.

Craig A. Rogerson, CEO of Philadelphia-based Chemtura, said the deal “provides premium value to our shareholders and benefits our customers and employees by making Chemtura part of a larger, stronger global enterprise.”

Ismail Shakil of Reuters noted that the price is a 18 percent premium:

Lanxess, the world’s largest synthetic rubber maker, is offering $33.50 in cash for every Chemtura share, representing a premium of about 19 percent to the Philadelphia-based company’s close on Friday.

Lanxess will use existing funds and bridge financing to buy Chemtura in a deal with an enterprise value of about 2.4 billion euros ($2.69 billion), it said in a statement.

With this deal, Lanxess will not further pursue its earlier-announced share buyback of around 200 million euros.