Lanxess to acquire IFF’s microbial control business
Lanxess has signed a corresponding agreement to acquire the microbial control business of International Flavors & Fragrances (IFF) for $1.3 billion or 9.6x EBITA. The deal should be completed in Q2 2022, following a carve-out process and subject to regulatory approvals. This is the firm’s second largest ever buy, just ahead of the recently completed acquisition of Emerald Kalama.
“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 (pictured). “It will make Lanxess one of the world’s largest suppliers of microbial control products.”
Following completion, IFF Microbial Control is to be integrated into Lanxess’ Material Protection Products business unit. It employs 270, operates two sites in the US and had sales of about $440 million/year and EBITDA of about $85 million in 2021.
IFF Microbial Control supplies antimicrobial active ingredients and formulations for material protection, preservatives and disinfectants. Its products go mainly into the personal care, household products, industrial water treatment, paint and coatings, building materials and animal biosecurity markets.
The buy is financed by debt capital and Lanxess has secured bridge financing for this. 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, the firm has also 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 joined IFF through its combination with DuPont Nutrition & Biosciences earlier in 2021.
A few weeks previously, Lanxess had 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 last year were in speciality products for the consumer care market, especially F&F. Some 30 new aroma chemicals of all kinds came with the deal, which also brought preservatives for multiple applications, such as the Kalama, Purox and Kalaguard brands of aldehydes and benzoates.