LyondellBasell to Take Over A. Schulman for $2.25-bn

Chemicals giant LyondellBasell Industries NV is set to acquire US-based plastics compounds producer A. Schulman for $2.25-bn including debt. The acquisition will double LyondellBasell’s plastic compounding business – which blends molten plastic with additives – and now largely caters to the automobile parts market.

“The acquisition of A. Schulman is a natural extension of our current platform. This combination will allow us to provide our customers with a wider range of innovative solutions while adding the ability to serve high-growth end markets beyond the automotive sector, such as packaging and consumer products, electronics and appliances, building and construction, and agriculture,” said Mr. Bob Patel, Chief Executive Officer of LyondellBasell.

Auto markets currently account for about 90% of LyondellBasell’s plastic compounding revenue and that will drop to just over 50% after the deal closes. The deal will also marginally boost LyondellBasell’s exposure to the agricultural sector, which has been the focus of mega-deals among chemicals makers.

A combined LyondellBasell-A. Schulman had $4.6-bn in revenue and EBITDA margins of 9.5% over the last 12 months, the companies said. The combined company is expected to hit $150-mn in run-rate cost savings in two years. After closing, the deal will add to earnings within the first full year, the companies said.

A. Schulman shareholders will also get one contingent value right per share that will give them net proceeds, if any, from the ongoing litigation and government probes related to Schulman’s Citadel and Lucent acquisitions.