AMSTERDAM — German chemicals giant Lanxess A.G. plans to sell its 50-percent ownership stake in synthetic rubber producer Arlanxeo Performance Elastomers to its joint venture partner, Saudi Arabian Oil Co. (Saudi Aramco).
The two companies, which founded the 50/50 venture in 2016, signed the sales agreement Aug. 8. The deal would make Saudi Aramco the sole owner of the company, which comprises assets that previously operated as Bayer A.G.'s rubber business.
Maastricht, Netherlands-based Arlanxeo is considered one of the world's largest producers of synthetic rubber, with 2017 sales of around $3.8 billion.
Saudi Aramco said the deal would diversify its downstream portfolio at an opportune time and strengthen its capabilities across the entire petroleum value-chain.
In particular, the deal will accelerate Saudi Aramco's growth into C4-based chemicals, including butadiene and isobutylene, according to Abdulaziz M. Al-Judaimi, senior vice president of downstream, and enhance Saudi Aramco's sustainability efforts to optimize tire performance-related fuel consumption.
Lanxess said it expects to receive around $1.65 billion in cash after deducting debt and other financial liabilities for its 50-percent share.
The parties expect the deal to be completed by year-end, although Lanxess said the transaction requires approval by antitrust authorities and that consultations with employee representative bodies are also to take place.
In establishing Arlanxeo, the two partners originally agreed on a lock-up period until 2021 for the JV.
Arlanxeo employs about 3,800 at 20 production sites in nine countries worldwide, including two in North America — in Orange, Texas, and Sarnia, Ontario. Among the company's products used in tires are butyl, bromobutyl, chromobutyl, butadiene and solution styrene-butadiene rubber.