LANXESS and International Flavors & Fragrances have signed a corresponding agreement yesterday, wherein the former intends to acquire the latter. IFF Microbial Control is one of the leading suppliers of antimicrobial active ingredients and formulations for material protection, preservatives and disinfectants, LANXESS said in a statement.
The transaction is still subject to approval by the relevant anti-trust authorities. In addition, the business must first be carved out from the IFF Group. LANXESS, therefore, expects the transaction to be completed in the second quarter of 2022, it added.
It also said that the IFF microbial control business represents sales of around $450 million and EBITDA of approximately $100 million. Within four years after the closing of the transaction, LANXESS expects synergies to add approximately $35 million (EUR 30 million) in EBITDA. The acquisition is expected to be earnings per share accretive already in the first fiscal year after closing.
“In 2021, all signs are pointing to growth. The acquisition of IFF Microbial Control is already the fourth this year and LANXESS’ second-largest ever. The business fits ideally into our strategic direction – specialty chemicals with attractive margins, applications in a wide range of industries, and with a global positioning. It will make LANXESS one of the world’s largest suppliers of microbial control products. At the same time, we are enhancing Consumer Protection to become the strongest segment in the Group and are once again taking LANXESS a decisive step forward in terms of profitability and stability,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG.
LANXESS will pay around $1.3 billion (EUR 1.1 billion) for the acquisition. “Taking into account the synergies we are aiming for, we are achieving an attractive purchase price of 9.6 times EBITDA,” said Michael Pontzen, CFO, LANXESS. The Group will finance the purchase price with debt capital and has secured respective bridge financing for this purpose.
Pontzen also said, “We will replace the bridge financing agreed with our banks in the coming months by placing corporate bonds in the capital market. In doing so, maintaining our solid investment grade rating is of great importance to us.”