Lanxess buys IFF Microbial Control
01. September 2021
Lanxess has agreed to acquire the microbial control business of IFF for $1.3 billion or 9.6x EBITDA. The deal should be completed in Q2 2022, following a necessary carve-out process and subject to approval by the regulatory authority. This is the firm’s second largest ever buy, trumping the recently completed acquisition of Emerald Kalama and will make it one of the world’s largest suppliers of microbial control products.
“The business fits ideally into our strategic direction – speciality chemicals with attractive margins, applications in a wide range of industries and with a global positioning,’ commented Matthias Zachert, chairman of the board of management at Lanxess.
The acquired business has 270 employees and two sites in the US. Sales and EBITDA were about $440 million and $85 million in 2021. It mainly sells antimicrobial active ingredients and formulations for material protection, preservatives and disinfectants for products led by personal care, household products, industrial water treatment, paint and coatings, building materials and animal biosecurity.
Following the completion of the deal, the business will be integrated into Lanxess’ Material Protection Products business unit. The buy is financed by debt capital and Lanxess has secured bridge financing. It expects synergies to add some $35 million in EBITDA and for the buy to be earnings-accretive in the first fiscal year after closing. As a direct result of the deal, Lanxess has cancelled its ongoing share buyback programme.
IFF, meanwhile, described the sale as “part of a strategic portfolio review … guided by our commitment to enhance long-term shareholder value”. It will use the proceeds mainly to pay down debt. Microbial Control became part of IFF through its combination with DuPont Nutrition & Biosciences earlier in 2021.
In early August, Lanxess completed the €870 million acquisition of Emerald Kalama Chemical. Among many other things, this will give the company a new presence in aroma chemicals, for which it will create a new Flavours & Fragrances (F&F) business unit, led by Holger Hüppeler.
About 75% of Emerald Kalama’s sales of €375 million in 2020 were in speciality products for the consumer care market, especially F&F. About 30 new aroma chemicals of all kinds came to Lanxess via the deal, which also brought with it preservatives for multiple applications, such as the Kalama, Purox and Kalaguard brands of aldehydes and benzoates.
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