(Reuters) - German specialty chemicals maker Lanxess (DE:LXSG) said on Thursday it has agreed to sell its organic leather chemicals business in a deal worth up to 195 million euros ($230 million) 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.
TFL is a global supplier of leather chemicals and a portfolio company of US investment company Black Diamond Capital Management, L.L.C.
The Cologne-based group made a string of divestitures last year, including its chrome leather chemicals segment, and said in March it was looking to sell the organic leather chemicals business as well.
With the sale, the company is withdrawing completely from leather chemicals business.
Chief Executive Matthias Zachert said that with the sale, Lanxess was becoming "somewhat more independent from the automotive industry, a key target industry for leather products."
The company reported earnings before interest, tax, depreciation and amortization before exceptional items at 224 million euros, above a consensus estimate of 217.0 million euros seen in a company-provided poll, but down 20.3% from last year's levels.
The company said weak demand from the auto industry, which makes up 20% of its sales, hit its earnings in the quarter, while the consumer protection segment, which makes ingredients for disinfectants, developed positively.
"As expected, after the huge slump in the global economy we felt the effects of the coronavirus crisis much more strongly in the second quarter than in the first three months of the year," Zachert said.
The chemicals group confirmed its full-year outlook for EBITDA before exceptional items between 800 million and 900 million euros.