Lanxess (LXS.F) is a German producer of chemical intermediates, additives, speciality chemicals and plastics. Over the last few months, they have signed agreements to acquire two more chemical companies and are in negotiations for a third. Among these acquisitions are two French disinfectant manufacturers: Intace, who specialise in fungicides and biocides for use in the consumer goods packaging industry (signed 14/01/21) and Theseo, a producer of livestock disinfectant products (expected to sign by mid-year). Both of these acquisitions come as Lanxess aims to expand its position as a global leader in biocide and antimicrobial manufacturing. 

Possibly the most interesting acquisition of the three is that of US firm Emerald Kalama Chemical (signed 14/02/21). Emerald is a speciality chemical manufacturer making most of its revenue from producing speciality chemicals for consumer products (food, household goods, cosmetics etc). They are the world’s leading producer of benzoic acid, a widely used precursor for the production of many more complex chemicals. This acquisition could provide Lanxess with a significant foothold in the food additive industry, given sodium benzoate (a chemical salt made from benzoic acid) is a major food preservative.

In addition to these acquisitions, Lanxess has also reaffirmed its commitment to achieving carbon neutrality by 2040. Just over a week ago, they opened a nitrous oxide processing plant at their Antwerp site which is expected to prevent the release of greenhouse gases equivalent to 150,000 tonnes of CO2 per annum. They have plans to open another of these plants in 2023 which is expected to eliminate a further 300,000 tonnes of CO2 equivalents a year.

Despite heavy spending over the last year, Lanxess’s balance sheet remains relatively strong considering circumstances. This is mostly due to them entering the global pandemic in a fairly cash strong position which has allowed them to make significant investments in potential future growth and sustainability. For these reasons, LXS.F could be considered a possibly profitable long-term investment.

Broker Consensus (19/02/21)

Analysts who cover this security

BofA Global Research – Stephanie Bothwell
Deutsche Bank  – Tim Jones
Jefferies – Laurence Alexander
Credit Suisse North America – Chris Counihan
Morgan Stanley – Paul Walsh
Citi – Andrew Benson
Commerzbank Corporate Clients – Michael Schaefer
Goldman Sachs Research – Georgina Iwamoto
UBS Equities – Patrick Rafaisz
Warburg Research GmbH – Oliver Schwarz
Equita SIM – Massimo Bonisoli
Metzler Equities – David Varga
Exane BNP Paribas
Macquarie Research
Societe Generale – Thomas Swoboda
Pareto Securities AS – Knud Hinkel
JPMorgan – Chetan Udeshi
Berenberg – Anthony Manning
DZ Bank – Peter Spengler
Nord/LB – Thorsten Strauss
Bankhaus Lampe
Kepler Cheuvreux – Martin Rödiger
Raymond James Europe RJEE/RJFI
Barclays – Sebastian Satz
Stifel Europe – Andreas Heine
Morningstar, Inc. – Rob Hales
Landesbank Baden Wuerttemberg – Ulle Woerner
Alphavalue – Martin Schnee
Baader Helvea Equity Research – Markus Mayer