Chemtura — Merger or Acquisition (September 2016)
23 slides from Chemtura's merger presentation, Sep 26, 2016
Slide 1: LANXESS to acquire Chemtura – Building a major additives player
Matthias Zachert, CEO Michael Pontzen, CFO Building a major additives player LANXESS to acquire Chemtura
Slide 2: Disclaimer and important additional information
The presentation relates to the proposed acquisition of Chemtura Corp. by LANXESS AG. The information included in this presentation is being provided for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase any securities, nor a solicitation
Slide 3: LANXESS to acquire Chemtura – building a major, global additives player
Acquisition Rationale Financial valuation Timing & milestones LANXESS to acquire Chemtura – building a major, global additives player Agreed acquisition of Chemtura, a US-based specialty chemical company and a major player in the field of additives All cash consideration of USD 33.50 per share Estab
Slide 4: Attractive characteristics of additives business
Attractive characteristics of additives business Increasing performance requirements drive growth above GDP Additives among the most attractive product groups in the specialty chemical industry LANXESS creates a major, global additives business Demand for technical service Product enhancement relati
Slide 5: Well established in lubricant additives and flame retardants
Well established in lubricant additives and flame retardants § Sales ~€1.5 bn § EBITDA pre ~€245 m § ~2,500 employees § 20 sites in 11 countries Chemtura has a growing and profitable additives business with a strong US footprint Sales and EBITDA are based on Q2 2016 LTM, USD/EUR 1.10 * Listed at NYS
Slide 6: A global player with tailor-made solutions and clear customer focus
A global player with tailor-made solutions and clear customer focus A broad product portfolio in the additives field Business Unit Additives Bundling forces (2014): All additives in one business unit LANXESS has established a strong additives platform with strong footprint in Europe in 2014 Business
Slide 7: Focus on industrial lubricants
Focus on industrial lubricants An attractive opportunity - demand driven by increasing efficiency needs in lubricants A global leader in highly fragmented industrial lubricant additives* (combined sales of ~€650 m) Industrial Lubricants Automotive Lubricants Highly fragmented market Growth drivers i
Slide 8: Product steps in lubricant marketplace
Base fluids LANXESS Chemtura Raw materials Chemical Intermediates Product steps in lubricant marketplace § Backward integration potential * Packages: technical term for formulations / mixtures of different additive components
Slide 9: Combined: a global leader in flame retardants
Flame retardants with 3-4% annual volume growth Combined: a global leader in flame retardants* (combined sales ~€900 m) § Flame retardants reduce flammability § Main applications: Ø Furniture (upholstery) Ø Construction (e.g. styrene insulation panels) Ø E&E (e.g. PCBs, TVs, computers) § Demand grow
Slide 10: Value chain flame retardants
Bromine Phosphor chloride Phosphorous based flame retardants LANXESS Chemtura § Complementary portfolios in flame retardants § Good platform for growth with new flame retardant developments Value chain flame retardants ü ü Backward integration Broad product portfolio
Slide 11: Urethanes and Organometallics: Broadening LANXESS' portfolio
Urethanes Strengthening segment High Performance Materials Integration into BU Advanced Industrial Intermediates High Performance Materials Antioxidants & Accelerators Aromatic Network Benzyl Products and Inorganic acids Polyols and Oxidation products Organometallics LANXESS Chemtura § Urethanes off
Slide 12: Business driven synergies
Business driven synergies Admin cost synergies ~€100 m synergies to be realized by 2020, thereof ~€25 m already in 2017 One time costs* ~€140 m OTCs and ~€50 m capex low realization risks Around €100 m synergies on EBITDA level by 2020 by combining Chemtura’s and LANXESS’ platforms § Cross-selling o
Slide 13: Key facts of acquisition
Key facts of acquisition Attractive EPS accretion* from year 1 Transaction with fair valuation § ~€1.5 bn of sales § Closing anticipated mid 2017 EV/EBITDA ~7x including synergies ~10x excluding synergies FX: 1.10 USD/EUR Sales and EBITDA pre exceptionals based on Q2 2016 LTM; 62.94 million share of
Slide 14: Solid financing with commitment to investment grade rating
Solid financing with commitment to investment grade rating Strong focus on investment grade rating in financing approach Initial financing in place – Balanced takeout financing and deleveraging will follow quickly § Full bridge financing in place for €2.0 bn underwritten by JPMorgan and Barclays § B
Slide 15: Timeline to closing
Documentation with SEC Proxy solicitation period October November December Regulatory application and approval process Take out financing Closing anticipated mid 2017 Signing Extraordinary Chemtura Stockholders’ Meeting* Closing * At stockholders’ meeting >50% (of outstanding shares) approval thresh
Slide 16: LANXESS and Chemtura – strong strategic and financial fit
Creating a global and major additives business with visible synergy potential Fast transformation of LANXESS to a more resilient, higher value and more cash generative company Fair valuation with high shareholder return and delivery on investment grade commitment LANXESS and Chemtura – strong strate
Slide 17: Backup – supporting material
Backup – supporting material
Slide 18: Petroleum Additives
Raw materials Base stocks (synthetic) Fluids Chemical Intermediates Greases Petroleum Additives: A well-positioned customer-oriented solution provider in lubricant additives with back-integration § Synthetic lubricant base stocks § Lubricant additives § Finished fluids § Industrial oils and greases
Slide 19: Great Lakes Solutions
Fully backward integrated Brominated flame retardants Great Lakes Solutions: A major player in flame retardants, elemental bromine and bromine derivatives § Flame retardants § Elemental bromine § Clear brine fluids § Bromine derivatives § Electronics § Ø growth rate: ~3% Globally operating in 3 site
Slide 20: Urethanes
Urethanes: A player with high level of technical service to offer customer specific solutions § Pre-polymers § Flexible coatings § Polyester polyols § Mining equipment coatings § Ø growth rate: ~3.5% Globally operating in 6 sites with new capacity in China § Major player in hot cast pre- polymers an
Slide 21: Organometallics
Metal compound Chemicals Organometallics Organometallics: mainly focused on polyolefin catalysts § Organometallics § Ø growth rate: 3-4% Operating in 3 sites with main production plant in Germany Specialized in production of complex, highly reactive organometallic compounds, especially for catalysts
Slide 22: Details on synergies and one-time costs
2018 2017 2016 2019 ~25 ~25 Synergies ~35 Preliminary implementation schedule [€ m] 2020 ~15 ~100 Total Details on synergies and one-time costs ~10 ~30 Capex ~10 ~30 ~70 Expense (one-time costs)* ~20 [€ m] [€ m] ~50 ~20 ~140 * excluding ~€80 m transaction related costs (including cost of planned ref
Slide 23: Contact details Investor Relations
Contact details Investor Relations Oliver Stratmann Head of Treasury & Investor Relations Tel. : +49-221 8885 9611 Fax. : +49-221 8885 5400 Mobile : +49-175 30 49611 Email : Oliver.Stratmann@lanxess.com Janna Günther Assistant to Oliver Stratmann Tel. : +49-221 8885 9834 Fax. : +49-221 8885 4944 Mob