Synthetic Rubber

Saudi Aramco and Lanxess Create World-Leading Joint Venture

09/22/2015 | Editor: Wolfgang Ernhofer

Matthias Zachert, Chairman of the Board of Management of Lanxess (right), and Abdulrahman F. Al-Wuhaib, Senior Vice President Downstream of Saudi Aramco, have signed the agreement on the new Joint Venture in Cologne, Germany. (Picture: Lanxess)

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LANXESS AG

Lanxess and Saudi Aramco plan to establish a joint venture for synthetic rubber. The speciality chemicals company and 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.

Cologne/Germany – 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. The high-performance rubbers are mainly used in the production of tires and technical applications such as hoses, belts and seals. The main customers include the automotive and tire industries but the products are also used in the construction industry and by oil and gas companies.

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 company will provide the joint venture with competitive and reliable access to strategic raw materials over the medium term.

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The transaction still requires the approval of the relevant antitrust authorities and is expected to be completed in the first half of 2016.

Best Possible Future Perspectives

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. “This alliance will enable us to give the rubber business a very strong competitive position and the best possible future perspectives”, said Lanxess CEO Matthias Zachert. “Together in the future we can produce synthetic rubber in an integrated value chain from the oil field to the end product, thus establishing one of the best positioned suppliers in the world market. In this way, we will be able to offer our customers even greater reliability than before.”