One of Saudi Aramco’s subsidiaries, called Aramco Overseas Company, has signed a joint venture agreement with the German specialty chemicals company Lanxess to create a new synthetic rubber company, splitting everything in half; the new company would develop, produce, market, sell and distribute the synthetic rubber used in the global tire industry, auto-parts manufacturing and a wide range of other applications.
As part of the deal, Lanxess will contribute its existing synthetic rubber businesses to the joint venture. The businesses currently have around 3,700 skilled employees and technicians. Those employees support 20 Lanxess production sites and four global research centers in nine countries across Europe, Asia and the Americas.
Saudi Aramco, through its subsidiary Aramco Overseas Company, plans to establish its stake in the new joint venture company via a share subscription and will bring financial stability and resources to continue investing in new technology.
“This is yet another major step forward in Saudi Aramco’s globally integrated downstream expansion strategy,” Amin H. Nasser, president and CEO of Saudi Aramco, said. “It will further enhance our competitive position in integrating our diverse portfolio. Partnering with a world-class company like Lanxess will help scale up our global presence and in turn create more opportunities for sustainable growth in Saudi Arabia and in markets around the world.”
Abdulrahman Al-Wuhaib, senior vice president for Downstream at Saudi Aramco, said the manufacture of synthetic rubber and elastomer products would create a new revenue stream for Saudi Aramco, while spurring economic growth and diversification opportunities in Saudi Arabia.
The transaction is expected to close in the first half of 2016 after it clears anti-trust regulations.
