March 6 (Reuters) - Shares in Lanxess tumbled on Friday to a 17-year low after the German speciality chemicals maker said that an investment vehicle backed by European buyout group Advent no longer
Lanxess shares plunge after Advent calls off Envalior stake deal
Lanxess and Advent: Deal Collapse and Market Impact
Background of the Envalior Stake Deal
LONDON/MUNICH March 6 (Reuters) - Lanxess shares were set for their worst day ever after the German specialty chemicals maker said the sale of its stake in plastics joint venture Envalior had been called off, one of the first deals dropped since the start on the air war in Iran.
An investment vehicle backed by European buyout group Advent decided against buying the stake of just under 41%, Lanxess said late on Thursday.
The deal would have meant a payout of some 1.2 billion euros ($1.39 billion) for Laxness.
Immediate Market Reaction
Lanxess shares were down 20% as of 1354 GMT, on track for their worst day ever.
Reasons Behind Advent's Decision
A person familiar with the situation said Advent had made the decision in light of a deterioration in the sector and more recently in part due to markets souring in the wake of the Iran conflict.
Broader Sector Challenges
The German chemical sector, the country's third-largest, has struggled for years with an economic slowdown, high energy costs, and supply chain issues.
Impact of Geopolitical Tensions
This week European chemicals shares fell after the U.S.-Iran conflict and the closure of the Strait of Hormuz roiled global markets and led to a surge in oil prices.
Future Outlook for Lanxess and Envalior
Even without the proceeds, Lanxess said it was solidly financed and the repayment of a bond due in October 2026 was already ensured.
Envalior was formed three years ago via a merger of Lanxess' plastic polymers business with the plastics division of Dutch firm DSM, after which Advent took a majority stake.
Advent has the right again to acquire the Lanxess shares again in 2027.
Additional Information
($1 = 0.8639 euros)
(Reporting by Alexander Huebner, Andres Gonzalez Estebaran ; writing by Bartosz Dabrowski; editing by Ludwig Burger, Anousha Sakoui and Jason Neely)
