Answers to important questions about the planned acquisition of Chemtura.

What is the rationale behind the acquisition?

The planned acquisition of Chemtura will make LANXESS a major international player in the additives field. The two companies complement one another perfectly, in terms of both their product portfolios and their regional positioning. Following the merger, LANXESS can expect improved sales and results. The acquisition also makes strategic sense, enabling LANXESS to deliver on its strategy of focusing on mid-sized markets and participating even more strongly in the growth in North America. In addition, the acquisition allows LANXESS to further diversify its customer industries and develop into an even more stable, efficient and profitable company.

How do the Chemtura and LANXESS businesses complement each other?

With the planned acquisition of Chemtura, LANXESS will be expanding its profitable specialty chemicals portfolio, as the product portfolios of Chemtura and the Rhein Chemie Additives (ADD) business unit at LANXESS complement each other perfectly. For instance, ADD produces phosphorus-based flame retardants, while Chemtura supplies bromine-based flame retardants. Following the merger, LANXESS will be even better placed to innovate and offer its customers comprehensive solutions to meet their requirements for flame retardants, lubricants and lubricant additives. Rhein Chemie Additives will also be able to unlock new customer groups for its packages know-how. Seen in these terms, the activities of LANXESS and Chemtura will be able to cover the lubricant industry’s entire value chain following the integration, thereby offering customers an even better set of products and service solutions.

The transaction also makes strategic sense beyond the additives sector, though. LANXESS will venture into two new fields as a result of the planned acquisition, namely urethanes and organometallics. Both these areas are well positioned in their respective segments and in line with LANXESS’s strategic objective of becoming a strong supplier in mid-sized markets. The Urethanes business includes hot-cast prepolymers, polyurethane dispersions, urethane surface coatings and polyester polyols. These are used to manufacture products for sophisticated applications in the construction, mining, oil/gas, sports and electronics industries. Organometallics are chemical compounds used in areas such as polymer production and the synthesis of fine chemicals and pharmaceuticals.

What is the volume of the transaction and how will it be financed?

The transaction is worth around EUR 2.4 billion. To secure the financing of the planned acquisition, LANXESS successfully placed a total of three bonds on the European capital market.

It started by issuing two euro benchmark bonds with a volume of EUR 500 million each, terms of 5 and 10 years respectively and coupons of 0.25 percent and 1.0 percent, respectively, on September 29, 2016. Both these eurobonds are listed on the Luxembourg Stock Exchange and traded in denominations of EUR 1,000 nominal value.

On November 29, 2016, LANXESS then successfully placed the first ever hybrid bond in the company’s history, with a volume of EUR 500 million. This hybrid bond has a term of 60 years and a coupon of 4.5 percent. It, too, will be listed on the Luxembourg Stock Exchange in denominations of EUR 1,000 nominal value. LANXESS can exercise the first regular redemption option in June 2023. The hybrid bond is subordinate to LANXESS’s other financial liabilities and is therefore partially of an equity nature, which makes it key to ensuring the primary objective of the financing – namely to maintain the investment grade status.

How high is the offer to Chemtura shareholders for the sale of their shares?

Under the terms of the merger agreement, Chemtura shareholders will receive USD 33.50 per share in cash for each outstanding share. This represents an 18.9 percent premium on the closing share price of USD 28.18 on September 23, 2016.

What level of synergies can be expected?

LANXESS is expecting the company to realize synergies of some EUR 100 million by 2020, with EUR 25 million to be realized in 2017.

What will LANXESS’s net debt look like after closing?

The net debt will increase by the purchase price and certain one-time costs. LANXESS then has a clear target of reducing the net debt, thanks in part to the strong earning power of the business acquired.

What is the timeline until closing?

Chemtura shareholders need to approve the planned acquisition before it can go ahead. They will vote on the merger at a special shareholders’ meeting that has been announced for February 1, 2017. The transaction also needs to be approved by the relevant antitrust authorities and given a number of regulatory approvals. LANXESS is expecting all the necessary approvals to be in place by mid- 2017.

Will LANXESS keep the Chemtura brands or will it use only the LANXESS brand?

In general, LANXESS wants to establish LANXESS as the company name and apply its brand architecture. It is intending to maintain a number of strong product brands from the Chemtura portfolio, though, including the Anderol brand, which stands for high-quality lubricant solutions in industrial applications.

How many people will be joining LANXESS and in which functions?

Around 2,500 Chemtura employees will be joining LANXESS, some 1,700 of these in the production plants and around 800 in other areas, e.g. administrative functions or sales & marketing.

Will the integration process involve job losses or plant closures?

The focus of the acquisition is fundamentally on a growth strategy. We’re currently analyzing the existing structures very closely to find the best possible structure for the combined businesses.

How long is the integration expected to take?

LANXESS expects the integration process to take around two years, although the company plans to implement the majority of measures in the first year after the completion of the transaction.

Will the transaction have any implications on the structure of LANXESS’s reporting segments?

After the merger, LANXESS will consist of four reporting segments (plus ARLANXEO). The planned acquisition of Chemtura will lead to the establishment of a new segment pooling the two companies’ additives business.

On completion of the transaction, Chemtura’s Urethanes business will strengthen the current High Performance Materials segment as a separate business unit, while OMS (Organometallics) will become an independent business line forming part of the Advanced Industrial Intermediates business unit (BU AII).

Is there now any room left for further M&A activities at LANXESS?

In the near term, LANXESS will focus on the integration of Chemtura and on quickly reducing net debt.

Will this transaction be detrimental to the envisaged organic growth of up to EUR 400 million at LANXESS?

LANXESS remains committed to organic growth and will continue to pursue this course in 2017.