Lanxess AG will pay $1 billion to acquire United States-based specialty chemical manufacturer Emerald Kalama Chemical, which makes products such as corrosion inhibitors for lubricants and cutting fluids.
Affiliates of Emerald’s majority owner, American Securities LLC, agreed to the sale, which is expected to be completed in the second half of this year, following approvals. Lanxess said it will finance the deal with existing liquidity.
Emerald, which is headquartered in Vancouver, Washington state, has approximately 500 employees at facilities in the United States and Europe and a global sales and distribution network. The sale will include Emerald’s production sites in Kalama, Washington; Rotterdam, the Netherlands; and Widnes, United Kingdom. According to Lanxess, Emerald Kalama Chemical generates about 45% of its sales in North America.
“Emerald Kalama chemical has a very efficient setup, bundling all its production activities at only three sites,” Matthias Zachert, Lanxess AG’s chairman of the board of management, said in a news release. “That is why we expect to integrate the new business very quickly.”
Emerald’s products used in lubricants include sodium mercaptobenzothiazole, known as sodium MBT. The intermediate chemical is used as a corrosion inhibitor in non-ferrous mixed metal systems – including copper, aluminum and brass – and in applications such as transmission fluid, coolant, hydraulic fluid, cutting fluid and refrigeration. It may also be used directly as a biocide and in the production of commercial biocides.
Some of the company’s sulfur intermediates are used as components, serving as corrosion inhibitors in the applications in the mining and ore processing industries.
According to Lanxess, Emerald Kalama achieved sales of about $425 million in 2020 and earnings before interest, taxes, depreciation, and amortization of $90 million. Within three years of the deal’s closing, Lanxess expects an additional annual EBITDA contribution of around $30 million from synergy effects.
“The businesses of Emerald Kalama Chemical are an ideal fit for us,” Zachert said. “We will further strengthen our Consumer Protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America.”
In 2006, investment firm Sun Capital Partners acquired then Ohio-based Emerald Performance Materials from Lubrizol. Since 2006, Emerald expanded through the 2012 acquisition of DSM Specialty Products and its operation in Rotterdam, along with the 2015 acquisition of Innospec Widnes Ltd. and its operation in Widnes. In 2014, Sun Capital Partners sold Emerald Performance Materials to holding group American Securities of New York.
Until last year, Emerald Performance Materials consisted of two companies – Emerald Kalama Chemical and CVC Thermoset Specialties. The latter was acquired by Huntsman Advanced Materials in May 2020.