DSM sells elastomers business to LANXESS, completes divestment

14 December 2010 07:49  [Source: ICIS news]

SINGAPORE (ICIS)--Netherlands-based DSM on Tuesday said that it has reached an agreement to sell the rest of its elastomers business to specialty chemicals producer LANXESS for €310m ($413m) on a cash and debt-free basis, which will complete its divestment program.

The sale of DSM Elastomers was expected to close early next year, subject to regulatory approvals, the company said in a statement.

DSM expected to book a profit of more than €100m upon from the transaction, it said.

“The price for the DSM Elastomers business represents an EBITDA (earnings before interest, tax, depreciation and amortisation) multiple of roughly six based on the expected EBITDA of 2010,” the company added.

The sale of the business was in line with the company's goal of focusing on life sciences and material sciences, DSM said.

In September, the company sold its thermoplastic elastomers business unit, formerly part of the elastomers business, to Teknor Apex Company.

DSM had finalised divestments of DSM Agro, DSM Melamine, Citric Acid, Stamicarbon and its energy interests between September 2009 and June 2010, the company said.

Total divestment proceeds, including the proceeds from the intended sale of DSM Elastomers, were expected to be about €1.2bn, it added.

“The transaction will also be an important step towards our goal of achieving roughly €1.4bn EBITDA pre-exceptionals in 2015,” said LANXESS CEO Axel Heitmann, in a separate statement.

DSM Elastomers produces the synthetic rubber EPDM under the brand Keltan. EPDM is used in the automobile, plastics modification, cable and wire, construction and oil additives industries.

DSM operates an EPDM plant in Sittard-Geleen, the Netherlands, with an annual production capacity of 160,000 tonnes as well as a 40,000 tonne/year EPDM plant in Triunfo, Brazil.

LANXESS’ technical rubber products business unit, meanwhile, sells EPDM under the brand Buna EP. LANXESS produces EPDM in Marl, Germany, and Orange, United States, with a combined annual capacity of 120,000 tonnes.

The global rubber market for EPDM is expected to show an annual single-digit growth in the next 10 years, driven by rising demand in China and Brazil, according to LANXESS.

DSM Elastomers, which is based in Sittard-Geleen, Netherlands, has around 420 employees worldwide and is expected to achieve sales of about €380m this year, according to LANXESS.

($1 = €0.75)

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By: Nurluqman Suratman

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