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Specialty Chemicals

Lanxess will acquire US firm Emerald Kalama

Purchase for $1.1 billion will put German company in the benzoate chemical business

by Michael McCoy
February 15, 2021

A photo of a chemical plant under construction.
Credit: Emerald Kalama
Emerald Kalama expanded and upgraded its plant in Rotterdam in 2017.

Once again, the German chemical maker Lanxess is acquiring a US-based specialty chemical company. Five years after acquiring Chemtura, Lanxess has announced a deal to purchase Emerald Kalama Chemical for $1.1 billion.

Based in Vancouver, Washington, Emerald Kalama has around 500 employees and posted sales last year of $425 million. About 45% of its sales are in North America, Lanxess says. The seller is American Securities, a private investment firm that has owned Emerald Kalama since 2014.

Emerald Kalama is the world’s largest producer of benzoic acid, which it makes via toluene oxidation at its original plant in Kalama, Washington, and at a facility in Rotterdam, the Netherlands, that it acquired from DSM in 2010. The firm makes derivatives including benzaldehyde, benzyl alcohol, and sodium benzoate at both sites. A facility in Widnes, England, acquired in 2015, produces benzaldehyde-based aroma chemicals.

When Lanxess acquired Chemtura for $2.5 billion, CEO Matthias Zachert said the deal was driven by the company’s desire to grow its business in specialty additives for lubricants, rubber, plastics, and other industrial markets.

This time, Zachert told stock analysts on a conference call, the goal is to boost sales to consumer markets. Roughly 75% of Emerald Kalama’s sales are of consumer specialties, Zachert said, including sodium benzoate for food and animal feed preservation and aroma chemicals for flavors and fragrances. The balance of sales are of industrial specialties, including benzoate plasticizers that complement phthalate-free plasticizers from Chemtura.

On the call, Zachert acknowledged that benzoic acid is a commodity increasingly made by companies in China. But he argued that Emerald Kalama’s strength is its integration into high-end derivatives. For example, following a $40 million upgrade of the Rotterdam site in 2017, Emerald Kalama is perhaps the only company in the world that can make ultra-high-purity benzoates.

Lanxess had earlier signaled to investors that it has 2 billion euros (about $2.5 billion) available for acquisitions. On the call, one analyst asked whether the company is done acquiring, following the deals for Emerald Kalama and two small French disinfectant makers it is also buying. Zachert responded that the process of integrating Emerald Kalama should be “speedy” and that Lanxess continues to monitor a list of about 10 potential acquisition targets. “Our financial power is still there,” he said.



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