CCI approves euro 2.75-bn Lanxess-Saudi Aramco deal

Fair trade regulator CCI today approved speciality chemicals company Lanxess and Saudi Aramco deal to form a joint venture for synthetic rubber valued at 2.75 billion euro.

Germany-based Lanxess and Saudi Aramco subsidiary, Aramco Overseas Company (AOC), will each hold a 50 per cent interest in the joint venture.

"CCI approves formation of a 50:50 joint venture for synthetic rubber between Lanxess and AOC," the Competition Commission of India (CCI) today said in a tweet.

According to the deal, Saudi Aramco will have to pay about 1.2 billion euro in cash for its 50 per cent share after deducting debt and other financial liabilities.

"Lanxess will contribute its synthetic rubber business to the new joint venture. This will include the Tire and Specialty Rubbers (TSR) and the High Performance Elastomers (HPE) business units, their 20 production facilities in nine countries and some 3,700 employees and additional support staff," Lanxess had said in a statement.

While, Saudi Aramco will provide the joint venture with competitive and reliable access to strategic raw materials over medium term.

CCI had considered "certain upstream and downstream products of the worldwide synthetic rubbers sector" as the relevant market for the deal.

"However, in the absence of any competition concerns, the relevant product and geographic markets be left open," the regulator had said.

The new joint venture will be managed by a holding company headquartered in the Netherlands.

The CEO for the new entity will be appointed by Lanxess and the CFO will be appointed by Aramco Overseas Company. Each company will have equal representation on the JV's board of directors. Lanxess will consolidate the joint venture's financials.