The world market for high-performance plastics, such as those used in electric vehicles, is still highly fragmented.
(Photo: Bloomberg)
Frankfurt, Dusseldorf The specialty chemicals group Lanxess and financial investor Advent are buying the plastics business of Dutch competitor DSM. The purchase price is 3.7 billion euros, as the company announced on Tuesday. Lanxess is bringing its High Performance Materials (HPM) business unit into a joint venture to be created for technical high-performance polymers with joint sales of around three billion euros
Lanxess announced last year that it would outsource its HPM business to an independent company. It is now being incorporated into a joint venture in which Advent takes over the entrepreneurial leadership. The new company is intended to form a core for further acquisitions in the market. Lanxess intends to withdraw from the segment in the future.
DSM Engineering Plastics and Lanxess HPM both have a strong focus on equipping the automotive industry. They produce high-performance plastics that are used in lightweight construction for electric cars, plugs or battery housings. The world market for such plastics is currently highly fragmented. Industry experts expect strong consolidation in the coming years, which will involve the best positions in electromobility equipment.
At the same time, both companies also have products in their portfolio that are used in cars with combustion engines and that could disappear in the long term as a result of the switch to electromobility.
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The plastics division of DSM has annual sales of around 1.5 billion euros with a profit margin of around 20 percent and is therefore about the same size as HPM, which recently had 1.6 billion euros in sales and an adjusted profit before special items of around 200 million Euro scored.
The bidding duo of Advent and Lanxess lived up to their role as favorites in the sales process. Competitors such as OMV, Koch Industries and SK Capital were also interested in the division, but were unable to assert themselves.
More: “We will not stand still”: Lanxess boss drives expansion with acquisitions.