Aramco Buys 50% of Synthetic-Rubber Makers, Leaves Germans in Charge

Aramco Buys 50% of Synthetic-Rubber Makers, Leaves Germans in Charge

The world’s largest synthetic-rubber business, Germany’s Lanxess, sold 50% of its business to its new partner Saudi Aramco, said Reuters.

The official stated objective  from behind this move is to help Lanxess gain better access to petrochemical raw materials.

The joint venture from these two companies will be established in the Netherlands and valued in at $3.1 b.

Operational control, however, will be assumed by Lanxess.

Lanxess Chief Executive Matthias Zachert explained that teaming up with a supplier of petrochemicals used in synthetic rubber meant following the example of its main rivals, something that would cut exposure to swings in the market.

“The number one in rubber is merging with the number one in energy”, he said.

According to Bloomberg, Aramco had outbid suitors including Ineos Group AG, according to people familiar with the situation.

“We have succeeded with not just a breakthrough, but an act of liberation for Lanxess,” Zachert added in reference to the company’s recent attempts to cut costs through layoffs.

“We are generating so much in the way of financial resources from the 50% stake that we can immediately start with growth again”, he insisted.

“The Aramco move comes on the heel of SABIC and Exxon Mobil’s plans to expand their Saudi based petrochemical joint venture Kemya, pointing towards a possible future strategic linkage between Aramco and SABIC in the domestic and international petrochemical sector to achieve economies of scale, expertise, marketing and financing,” explained Mohamed Ramady, an independent energy analyst and former Professor of Finance and Economics at King Fahd University of Petroleum and Minerals at the city of Dhahran.


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