Specialty chemicals maker Lanxess said on Thursday it has agreed to sell its organic leather chemicals business in a deal worth up to 195 million euros as part of its push to reduce its reliance on the auto industry.

 

Lanxess said that according to the sale agreement with TFL Ledertechnik GmbH, the fixed part of the purchase price would be 80 million euros, while a performance-related part could go up to 115 million euros. In addition, TFL will assume certain liabilities associated with the business. The transaction is still subject to the approval of the relevant authorities. Lanxess expects the transaction to close around mid-2021.

    

TFL is a global supplier of leather chemicals and a portfolio company of US investment company Black Diamond Capital Management, L.L.C. 

 

“We are convinced that the transfer to TFL will open up new growth and development prospects for the business and will thus significantly strengthen it,” said Matthias Zachert, Chairman of the Board of Management of Lanxess. “At the same time, we are making Lanxess somewhat more independent from the automotive industry, a key target industry for leather products.”

 

Tanneries use organic leather chemicals in all stages of leather production. Lanxess manufactures the products in Leverkusen (Germany), Filago (Italy), and Changzhou (China). This is complemented by application-oriented laboratories and sales offices around the world. TFL will take over all operations of the organic leather chemicals business line from Lanxess with a total of around 460 employees. In 2019, Lanxess generated sales in the lower three-digit million euro range with the business.

 

With the sale, Lanxess is withdrawing completely from leather chemicals. The specialty chemicals company had already divested its chrome chemicals business, as well as its stake in the South African chrome ore mine (transaction expected to be completed by the end of 2020). The company has been reporting the leather business unit as a discontinued operation since the end of last year.