Lanxess AG (LXS) abandoned a plan to sell a unit making additives to vulcanize rubber as new Chief Executive Officer Matthias Zachert reviews assets at the world’s largest maker of synthetic tire components.
The board decided to abandon the planned sale of the business unit at a recent meeting, Lanxess spokesman Ingo Drechsler said by phone. The rubber accelerator and anti-oxidants business will become part of the advanced industrial intermediates division, he said.
Private-equity firms had submitted binding bids for the unit that generates about 220 million euros ($284 million) in annual sales, according to
people with knowledge of the situation, who asked not to be identified because details of the sale process are private. Improving results prompted Zachert to stop the sale process, run by Macquarie Bank Ltd., they said. Drechsler declined to comment on the bid process.
Aborting the transaction shows how Zachert, who took over in May, is imposing his strategy at the German company. Lanxess, which gets about 40 percent of sales from car and tire producers, has struggled as the European automotive market slumped to a two-decade low last year. Last month, Lanxess said it will merge four divisions to reduce costs and accelerate decision making, cutting the number of business units to 10 from 14.
The CEO plans to give investors more details on future restructuring measures on Nov. 6. The former Chief Financial Officer of Merck Kgaa, who previously held the same role in Lanxess prior to his post at the drugs company, aims to restore earnings and tackle a portfolio still heavily geared to the automotive and tire industries, where competition from Asian rivals is stiffening.
Upon taking the helm earlier this year, Zachert said Lanxess under former CEO Axel Heitmann had lost its “cash discipline,” with a hefty spending and expansion program. To improve efficiency and cut costs, Zachert has eliminated management positions, including executives associated with the board.
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