Saudi Aramco and Lanxess Create World-Leading Joint Venture

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Abdulrahman Al-Wuhaib, Senior Vice President Downstream, Saudi Aramco said: “Through the joint venture agreement we are investing in a world-class synthetic rubber and elastomer products capability that already supplies many of the world’s largest tire and automotive-parts manufacturing customers. In addition to creating a new revenue stream for Saudi Aramco, the agreement will spur economic growth and diversification opportunities for the Kingdom of Saudi Arabia and the Middle East region in high-volume sectors, such as tire and auto-parts manufacturing, that are dependent on higher-margin, value-added chemicals products.”

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The new 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.

The Best Partner Possible

With the creation of this joint venture, the German chemicals company is implementing the third stage of its three-phase realignment program. “We have established a completely new strategic starting point for our company in just over a year”, said Zachert. “Not only have we streamlined our administrative functions and already made many of our production structures and processes more efficient but with this joint venture in the rubber business we are delivering on the most important phase of our realignment – with the best partner possible and in a very short period of time. The resulting financial headroom will allow us to return to growth considerably sooner than expected.”

The chemical company 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.

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