Advent International and Lanxess have agreed to acquire Royal DSM’s DSM engineering materials business. The value of the deal is 3.7 billion euros and will be financed by the joint venture formed by Advent and Lanxess. The JV will focus on engineering and high-performance polymers.
Frankfurt, May 31, 2022 – Advent International (“Advent”), one of the largest and most experienced global private equity investors with a well-established track record in Chemicals investing, and specialty chemicals company LANXESS are establishing a joint venture for engineering and high-performance polymers. The two companies today signed an agreement to acquire the DSM Engineering Materials business (DEM) from Dutch group Royal DSM, which will become part of the new joint venture. The Enterprise Value is around EUR 3.7 billion and will be financed by the joint venture via equity from Advent and external debt. The business represents sales of around EUR 1.5 billion with an EBITDA margin of approximately 20 percent. DEM is one of the leading global suppliers in high-performance specialty material that address key market needs in electronics, electrical and consumer goods.
In addition, LANXESS is combining its High Performance Materials (HPM) business unit with DEM. HPM is one of the leading suppliers of engineering and high-performance polymers, which are used primarily in the automotive industry. The business represents annual sales of around EUR 1.6 billion with EBITDA pre exceptionals of around EUR 200 million.
The combined company will have sales of about EUR 3 billion. The transaction is still subject to approval by the authorities. Closing is expected in the first half of 2023. Advent will hold at least 60 percent in the joint venture, LANXESS a stake of up to 40 percent.
Ronald Ayles, Managing Partner at Advent International said: “Joining forces with LANXESS in this industry transforming transaction is a highlight for Advent as we have built a trusted, longstanding relationship and share the highest mutual respect. Together we plan to bring the experience, deep sector know-how, and financial resources to make the joint venture a global success story for everyone involved. The combination of LANXESS’ High-Performance Materials (HPM) and DSM Engineering Materials (DEM) creates a strong platform and brings together extensive expertise, resulting in the best opportunities for employees and more value for customers.”
LANXESS CEO Matthias Zachert added: “LANXESS will once again become significantly less dependent on economic fluctuations. In addition, we as LANXESS will strengthen our balance sheet with the proceeds from the transaction and gain new scope for the further development of our Group. With the new joint venture, we are forging a strong global player in the field of high-performance polymers. The portfolios, value chains and global positioning of the two businesses complement each other perfectly. With its innovative products, the joint venture will be able to play a key role in shaping future developments – for example in the field of electromobility. In Advent, we have a strong and reliable partner with profound experience in the chemical industry and our customer industries.”
Global set-up and high backward integration
Advent International will be the majority owner of the newly created joint venture and has extensive investment experience in the global chemical sector with a proven track record in transforming companies from corporate carve-outs into industry-leading players. Advent also fosters the growth and market position of portfolio companies through further acquisitions and organic investments.
DSM’s Engineering Materials business comprises polyamides (PA6, PA66) as well as various specialty materials (PA46, PA410 and specialty polyesters as well as PPS). Around 2,000 employees work for the division at 9 production and 7 research sites in all relevant markets worldwide. In addition to Europe and the US, the business has a particularly strong presence in Asia.