Disinfectants have become ubiquitous during the corona pandemic, and now the chemical company Lanxess wants to expand its business with the corresponding active ingredients. The Cologne-based company wants to buy part of the American group International Flavors & Fragrances (IFF) and spend around 1.1 billion euros for it. The companies announced it on Tuesday evening. IFF’s so-called antimicrobial products are also used as preservatives in household cleaners or laundry detergents, so they extend the shelf life of the products.
The planned acquisition is the fourth that Lanxess has announced this year. “2021 is all about growth,” says CEO Matthias Zachert. For example, the company M-Dax took over a manufacturer of flavors and preservatives this summer. And in the spring, Lanxess bought a manufacturer of pesticides and disinfectants. The company says it will now become one of the world’s largest suppliers of germ protection products.
Lanxess was founded in 2004 when the Bayer Group subcontracted a large part of its chemical activities to the new company and listed them on the stock exchange. Since then, Bayer has focused on drugs and agricultural chemicals. Lanxess, on the other hand, has its eye on specialty chemicals and has sold to mass market companies – like the one with leather chemicals recently. In addition to combating germs and spoilage, the company relies, for example, on additives or color pigments.
The group ends a share buyback program it decided on at the start of the crisis
The IFF division recently achieved an annual turnover of almost 400 million euros with around 270 employees. It operates two of its own factories in the United States, as well as production capacity at other active ingredient manufacturers around the world.
The competition authorities must now examine the takeover and IFF must formally subcontract the division to the group. Lanxess expects to be able to complete the acquisition in the second quarter of the coming year. The company wants to finance the recovery with bonds.
Since Lanxess is spending a lot of money on the acquisition, the group is finally putting an end to a share buyback program that it had decided in March 2020 but that it had already suspended in April 2020. Lanxess saw to the back when it was best to conserve cash at the onset of the Corona crisis. When companies buy back their own shares, share certificates become scarce and tend to be more expensive. Buyback programs are sometimes also seen as an expression of a lack of ideas or a reluctance to invest. On Tuesday, Lanxess temporarily gained a good 2% in market value.