Lanxess AG acquiring Chemtura Corp. for roughly $2.1 billion

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Lanxess AG announced on Sunday that it has decided to acquire Chemtura Corp. (NYSE:CHMT) in a cash transaction valued at $2.1 billion, in a bid to strengthen its lubricant additives and flame retardants segments.

Philadelphia-based Chemtura will receive $33.50 per share, which represents a premium of 19 percent to its stock closing price of $28.18 on Friday. The deal is anticipated to close by the middle of 2017, and has yet to receive approvals from regulators and Chemtura shareholders. Including the assumption of Chemtura debt and pension obligations, the deal will have an enterprise value of nearly $2.7 billion.

The acquisition will take the German specialty chemicals company into two new lines. The first one is urethane polymers utilized to coat sporting things and mining equipment, and the second one is organometallics, which is often used as a catalyst.

Lanxess said that it is abandoning a previously disclosed buyback program of 200 million euro amid Chemtura transaction. The company plans to finance the deal primarily through senior and hybrid bonds, besides existing liquidity. It secured bridge financing of 2 billion euros from Barclays Plc and JPMorgan Chase, and intends to arrange long-term borrowings in a range of 1.5 billion euros-2 billion euros.

A number of chemical deals occurred this year around the globe. The biggest transaction was Bayer Ag’s proposed acquisition of Monsanto Co. (NYSE:MON) for $65.7 billion.

Morgan Stanley is acting as a financial adviser to Chemtura, while Davis Polk & Wardwell LLP is offering legal advice.

Chemtura’s share price has increased about 3.6 percent so far this year. The 52-week range of the stock is $23.50-$32.34. The company’s market cap is $1.82 billion and P/E ratio is 58.51.  

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