The Tire & Specialty Rubbers unit produces butyl rubber, solution styrene-butadiene rubber, neodymium-polybutadiene and emulsion-styrol butadiene rubber — polymers used in tire production.
The High Performance Elastomers unit produces EPDM, chloroprene rubber, ethylene-vinyl acetate rubber, hydrogenated nitrile rubber and nitrile butadiene rubber, materials used more commonly in engineered rubber products like hoses, belts and seals serving the automotive, construction, oil and gas, and tire industries.
The two units are part of Lanxess' largest business segment, Performance Polymers, which also includes the High Performance Materials (Bond-Laminates) unit.
“This is yet another major step forward in Saudi Aramco's globally integrated downstream expansion strategy,” Saudi Aramco President and CEO Amin H. Nasser said.
“It will further enhance our competitive position in integrating our diverse portfolio. Partnering with a world-class company like Lanxess will help scale up our global presence, and in turn create more opportunities for sustainable growth in Saudi Arabia and in markets around the world.”
New starting point
The joint venture marks the third and final stage of Lanxess' three-phased realignment program “Let's Lanxess Again,” which was implemented in August 2014.
“We have established a completely new strategic starting point for our company in just over a year,” Mr. Zachert said.
The firm said it plans to use about $446 million of the proceeds from its transaction with Aramco to invest in the growth of its Advanced Intermediates and Performance Chemicals segments, which Lanxess said are well-positioned and less cyclical.
Lanxess' Performance Chemicals segment includes the Rhein Chemie Additives, Inorganic Pigments, Ion Exchange Resins, Leather and Material Protection Products units. Advanced Intermediates includes the Advanced Industrial Intermediates and Saltigo units.
Lanxess said it will use another $446 million for further reduction of its financial debt position with another $223 million planned to be used for a share buyback program.
Lanxess' realignment consisted of three phases — business and administration structure competitiveness; operations competitiveness; and portfolio competitiveness — the first of which resulted in about 1,000 layoffs to its work force and the restructuring to 10 business units from 14. Lanxess confirmed in its first quarter results that this phase is complete.
The second phase involved the restructuring of its EPDM and neodymium-based performance butadiene rubber production, affecting about 140 employees worldwide. The firm will halt EPDM rubber production at its facility in Marl, Germany, and will realign its EPDM and Nd-PBR production to four strategic regional facilities with one in North America, one in South America, one in Europe and one in Asia/China.
“Not only have we streamlined our administrative functions and already made many of our production structures and processes more efficient, but with this joint venture in the rubber business we are delivering one the most important phase of our realignment, with the best partner possible in a very short period of time,” Mr. Zachert said.
“The resulting financial headroom will allow us to return to growth sooner than expected.”
Dhahran, Saudi Arabia-based Saudi Aramco calls itself a “world leader in hydrocarbons exploration, production, refining, distribution, shipping and marketing, and the world's top exporter of crude oil and natural gas liquids.”
Saudi Aramco claims it is the world's largest crude oil exporter, producing roughly one in every eight barrels of the world's oil supply
