LANXESS seeks small and mid-sized acquisitions - Heitmann

15 September 2010 14:13  [Source: ICIS news]

DUSSELDORF (ICIS)--LANXESS is seeking small and mid-sized acquisitions as part of plans to grow its leading earnings indicator by around 80% in the next five years, the company’s CEO said on Wednesday.

LANXESS’ primary focus will be organic growth, Axel Heitmann said, “but we also remain interested in seeking out attractive opportunities for external growth”.

A 2:1 ratio of organic growth to external growth “worked well for us in the past,” he told journalists at LANXESS’ annual media day.

“We will continue to emphasise organic over external for the next five years.”

The Germany-headquartered company revealed plans to grow its earnings before interest, tax, depreciation and amortisation (EBITDA), before exceptional items, to around €1.4bn ($1.8bn) in 2015 from a projected €800m in 2010.

All businesses are expected to contribute to this earnings growth by generating an EBITDA compound annual growth rate of at least 5%, Heitmann said.

“We have given our managers their marching orders for the next five years.”

The performance polymers segment, with its rubber and plastics activities, will be the strongest growth driver, he said.

New projects, including a major butyl rubber project in Singapore, will contribute a substantial part of the EBITDA growth, he added.

“We prefer to get engaged in areas where we already have a strong position. It doesn’t matter whether it’s organic growth or external growth,” said Heitmann.

LANXESS has a good track record on mergers and acquisitions (M&A), he remarked.

The company’s five largest acquisitions have contributed roughly €600m in annual sales to the group, and were EPS (earnings per share) accretive within their first two years, he noted.

The acquisitions took place in the emerging markets of Brazil, China and India, he added.

($1 = €0.77)

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By: Anna Jagger
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