Degussa and Lynchem establish joint venture for exclusive synthesis in China
Degussa, of Dusseldorf, Germany, and Chinese company Lynchem Co. Ltd have signed a contract to establish a joint venture. The goal of the new company, which will operate under the name of Degussa Lynchem Co. Ltd, is to enhance Degussa's and Lynchem's manufacturing asset base for the production of custom-manufactured fine chemicals and to provide the customer base of Degussa and Lynchem with more competitive solutions.
Degussa, of Dusseldorf, Germany, and Chinese company Lynchem Co. Ltd have signed a contract to establish a joint venture. The goal of the new company, which will operate under the name of Degussa Lynchem Co. Ltd, is to enhance Degussa's and Lynchem's manufacturing asset base for the production of custom-manufactured fine chemicals and to provide the customer base of Degussa and Lynchem with more competitive solutions.
Degussa (China) Co., Ltd., of Beijing, an affiliate of Degussa AG, will acquire 51% of Lynchem. The remaining 49% will be held by the current owners. Closing of the transaction is expected before the end of 2006, and will be subject to governmental and anti-trust authority approvals.
Degussa will become the first European supplier to implement the concept of horizontal integration in the custom-manufacturing market. This will allow cost competitive manufacturing of on-patent intermediate and API steps, off-patent APIs and other special chemicals in the Chinese joint venture. At the same time, the customers will benefit from Degussa's extensive portfolio of leading technologies available at its European sites and its track record of compliance with all regulatory and intellectual property requirements for on-patent intermediates and APIs.
"This transaction is a decisive step in the continued development of our fine chemicals activities, which represent one of our important core business areas,' said Dr Alfred Oberholz, deputy chairman of the management board of Degussa.
Lynchem is a leading Chinese fine chemicals custom-manufacturing company of 1,200 employees with a 50 hectare facility in Dalian/Liaoning Province and sales of Euro 335m in 2005. The company was established in 1995, has a reactor capacity of more than 800m3 and exports more than 95% of its products to leading pharmaceutical, agrochemical and other specialised customers in Europe, North America and Japan.
"Lynchem has been a pioneer in promoting and developing in China the custom-manufacturing of intermediates and GMP regulated products for the world markets," said Yuncai Wang, founder and majority shareholder of Lynchem. "The partnership with Degussa will result in a competitive advantage for the new joint venture. We are pleased to have attracted such a strong partner."