LANXESS Aktiengesellschaft (LXS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the LANXESS Conference Call. I would like to turn the conference call over to André Simon, Head of Investor Relations. Please go ahead.

Thank you very much, Alexandra, and good morning to everybody from Cologne, and a warm welcome to our conference call regarding our strategic steps we initiated this morning. I have our CEO, Matthias Zachert; and our CFO, Michael Pontzen. Please take note of our safe harbor statements. With that, I'm happy to hand over to Matthias for a presentation and afterwards the Q&A. Matthias, please go ahead.

Yes. Thank you, André, and a warm welcome from my side as well. I'm addressing the presentation that has been dispatched this morning. And let's come to the deal we've just announced a few moments ago. It's not often during a professional lifetime when you can create something substantial. And with today's announcement, I think we create a joint venture in the polymer industry, which is unique, which is strong. And as a matter of fact, I've been working on this for more than 10 years and eventually, it comes through. In the presentation on Page 4, we basically indicate the 3 takeaways. A global strong polyamides joint venture will be formed between 2 companies that are extremely complementary to each other. DSM is global. We are global. DSM is strong in Asia, and combined in the Western Hemisphere, we would be a leader of complementary products and, of course, complementary sales forces. And I think it will be strongly welcomed by everybody, also by our customers. As far as this joint venture is concerned, we will take a certain share. This depends also on the cash release, cash in that we will receive on day of closing. It will be at least EUR 1.1 billion. Should it increase, our participation will go lower, but it will definitely at the level of EUR 1.1 billion lead to a participation around 40%. We like to be involved in this joint venture because we know that through synergies, implementation in the years to come, and the growth in the e-mobility space and in lightweights, this joint venture is set for success in the future. And therefore, having a good stake in this joint venture offers our company the possibility to benefit from future value creation. The third point I would like to convey, and this is the third key takeaway for our investing community. From 4 segments, we will reduce to 3. We basically, with this significant steps, keep our foot in the polymer space, but as far as the core of our company is concerned, the company will focus going forward on specialty chemicals. So it's a pure chemical company that will evolve in the years to come. And from 4, we would reduce to 3 segments. We achieved through this transaction, immediate cash inflow at the time of the closing. We participate to substantial value upside in the years to come and at the same point in time, we achieved portfolio simplicity. Page #5 are the key financial cornerstones. Our business units, High Performance Materials, which achieved around about EUR 1.5 billion sales, at least as far as last year is concerned, and achieved EBITDA of round about EUR 210 million, has been valued at an enterprise value of EUR 2.5 billion, which corresponds to a multiple of 12. Financial compensation, as I indicated, are guaranteed EUR 1.1 billion at the time of closure, and these will be guaranteed cash proceeds. It can go up by another EUR 100 million, EUR 200 million according to our analysis. And should this be the case, and we will get more cash proceeds at the time of the closing. Of course, our 40% stake will be reduced, respectively. Page #6. We will form this joint venture with an international leading powerhouse in the private equity space known in the chemical industry for many, many years, Advent is a true professional chemical connoisseur. And for that very reason, at a very senior level at the key principles area, we have agreed on teaming up as a powerhouse, Advent and LANXESS and combining here, making it possible to achieve a combined engineering plastic joint venture, which I think would be a true strong player going forward. Of course, the joint venture will lead to immediate cash in, as I've indicated before, as normal in these kind of transactions, of course, the company ourselves has negotiated also clearly exit optionalities that will come due earliest in year 3 or at the end of year 3. And what will happen in our financials will be a deconsolidation of the business unit, HPM, which is expected to happen then next year. So after closing will be completed, we will basically reduce our company setup to 3 segments. Page 7 gives you the overall analysis on the improved portfolio that we are going to have. We exit the business that has proven to be more volatile in the past. We've seen that in 2020 when sales dropped substantially. And of course, on top of that, the automotive exposure, which in the past was close to 20%, is now being reduced to below 10% going forward. For the joint venture itself, I've indicated that the competitiveness is substantially strengthened. 2 strong players team up here, and of course, we'll go for respective synergy and value creation. As far as LANXESS is concerned, at the time of the closure through the cash proceeds, we will reduce our indebtedness to round about 2.5, which corresponds to the solid BBB flat investment-grade rating that we have always have gone for. Page #8 shows you the cash proceeds, and how we will use that after the closing has happened. We are planning for share buyback in the amount of EUR 300 million. This is roundabout the possibility we have according to our AGM vote. And therefore, we can execute that without further approvals. On top of that, of course, the remainder will go to deleverage of the balance sheet in order to achieve the 2.5 net debt-to-EBITDA. Let's come to the company descriptions of DSM and LANXESS, shown on Page #10. All in all, joint venture will be created with round about EUR 3 billion in sales. We should have profitability of EUR 500 plus. Of course, substantial synergies will be achieved in the years to come. We will have synergies on the top line, synergies on procurement optimization on SG&A, of course, worldwide, and therefore, a veritable company of size, turnover and profitability should be feasible. Production sites, all in all, 20 and nicely covering all regions and thus assure customer proximity. And also, this holds true for R&D centers, which, in total, will sum up to 14. Employees, 4000 people. So all in all, you see that this is a size of the company. Page 11 gives you an indication on where synergies will come from. And of course, this will be detailed in the time, especially after we've done the closure. Of course, first views on potential synergies will surely be also worked upon in the integration going forward. On page 12, you see, again, the setup on the left-hand side. So LANXESS and Advent will, on a combined basis, purchase the Engineering Materials business from DSM at an agreed enterprise value of 3.7%. Running EBITDA of DSM is around about EUR 300 million. The business has been valued at 12.5x. And from the communication that most of you have seen from the DSM, the polyamide business of DSM had achieved margins around about 20% and therefore, it's a very nice profitable cash-generative business. As far as HPM is concerned, our polyamide business, it's slightly closer to the 10%, 15% in terms of margins we achieved last year, EUR 210 million EBITDA. The enterprise value between Advent and LANXESS has been agreed to EUR 2.5 billion, and it corresponds to nearly the same multiple that we have agreed for DSM. So let's sum up and this we show on Page #14. We should achieve here a clearly better resilience as before because automotive exposure is going down substantially. This should lead to a higher resilience, like you've seen in Corona times. We had one division that had more volatile the EBITDA and that was Engineering Materials. And through the deconsolidation going forward from '23 onwards, the 3 chemical segments in the specialty space should, therefore, show higher resilience going forward. Complexity will be reduced from 4 to 3 segments. Financial profile, as far as leverage is concerned, and including the potential IFF, acquisition should go down. And as far as sustainability is concerned, also here, we make strides in the right direction. How will LANXESS look like going forward, reduce complexity and definitely specialty chem nature will shine through in a clearer way because Consumer Protection after the inclusion of [ INF ] should be the largest segment as far as profitability contribution is concerned. So from 4 segments to 3, and as far as the size of Consumer Protection is concerned, it will become stronger going forward. Let's shed some lights on our past transactions that we've done, and we've highlighted here the acquisitions and divestitures. And I think as far as the track record here is concerned, Chemours acquisition for synergies, Chemtura, all of that what you have seen over the last few years were decent acquisitions, but we don't shy away from also highlighting our average multiples on divestitures that we did, ARLANXEO round about 9 on the 2 steps we took here, Currenta multiple on the EBITDA was around 17 including the super dividends, organic leather chemicals divestitures at 11. Now the business unit, HPM, at 12. I've indicated that now all businesses are strong leading businesses with respective good valuations. And as far as the LANXESS' current trading is concerned, I think it's not fully reflecting the performance of our past transactions and the structural profile of our company going forward. Page 17 shows you how, on an illustrative basis, our current multiple would be post closure. And also, this gives indications that some value uplift could be achieved going forward once we have convinced the markets that this deal is a good one. Page 18. I summarize again the transaction. We achieved all goals in one: first, deleveraging substantially the balance sheet going forward; second, improving our portfolio; and third, creating clear optionalities for future value because of our participation in this joint venture and of course, the future upsides we achieve once we exit this joint venture after synergy implementation has been delivered. Ladies and gentlemen, so far to our presentation, and I'll now open the floor for your questions.

[Operator Instructions]. The first question is from Andrew Stott of UBS.

Yes, congratulations on the deal. I had 2 questions, please. The first 1 was on the exit of the 40% equity you're going to have in the JV. So what's the earliest date you can actually do that? And is that your choice at that time? Or is it an agreed effectively an agreed decision by both parties on an exact date? So just around the mechanics of that. Also, I don't think you shared the multiple fixed that you referred to in the presentation. Are you open to doing so? That's the first question. The second one is on the balance sheet. So pro forma, as you said, 2.5, that doesn't include the buyback proposal today, I assume. I'm just wondering why the buyback given that 2.5 is still quite a high level of leverage.

Well, Andrew, as far as your first question is concerned, we have customary agreements on the exits. And I can only allude to the fact that we have done transactions of these structures before and have agreed on certain exit mechanisms. It's completely customary that both partners here have an agreement in place. The earliest time where we can exit our process is subject to a few conditions. But it's in our hands. So we can call and therefore start the exit process, however, earliest after 36 months. So that's also when we consider that synergies will be implemented. You normally have a ramp-up of synergies over the few years and therefore everything here is geared to the possibility that we start exiting after year 3, and this is fixed. As far as the 2.5 is concerned, your assessment is correct. I would say, 2.5 net debt to EBITDA is nothing of concern. It's fully in line with the BBB flat investment-grade rating. So therefore, it's indicating a strong balance sheet. And the EUR 300 million, is it in? Is it out? Your assessment is right, that would add. But does that add significantly to the 2.5? No it doesn't, and likelihood is, however, that even in the closing the cash proceeds of EUR 1.1 billion will be increased. It's not guaranteed the EUR 1.1 billion are locked in. It can move up and therefore eventually my assumption is that we would, after closing, end up at the 2.5 that we have indicated in the presentation.

This is just follow up quickly on that first answer you gave. On the exit, is one of the preconditions and absolute level of EBITDA?

No, it's not. It's fixed on timing and possibility to basically also exit respectively. I said there are few conditions that we consider will be achieved in year 3. If they are not achieved in year 3, then of course we continue having the optionalities going forward and that is therefore a clear pre-defined approach for us, and I think you see the value creation aspect embedded in the negotiations that we agreed with Advent. They can step in. We can step out. So -- but however it's a mechanism where, from our perspective, value creation over the next two years is possible.

And sorry, am stealing one more. Apologies. The multiple you are getting for the -- to your asset is the same as the pro forma multiple. That was your statement. Correct?

It was not my statement, and I said that there are certain elements that are linked to confidentiality. I can only allude to the fact that we have negotiated a EUR 2.5 billion enterprise value. An exit mechanism and the second statement I've made, we have made joint ventures in this structure already 2 times, where after we exited, it became very clear that everything on the exit had been pre-defined, and I think you can make your own conclusion out of this.

The next question comes from Andreas Heine from Stifel. Your line is now open.

Yes, I only have 2. The other part of these Engineered Materials business, have you designed it towards where you put that and what the future of that business will be? And second, only for clarification. The buyback is what you consider immediately? Or is that after you have received [indiscernible]?

I have a follow-up question to your first one. You're alluding to the Urethanes business?

Yes. Yes. The Engineered Materials. You said this will be 3 segments left. And my understanding is that HPM does not include this, so that's not part of the joint venture.

Yes, I confirm this, Andreas. So the Urethanes business, which according to good analysts is around about EUR 250 million in sales and has a profitability according to good analyst between EUR 40 million and EUR 50 million. Will -- it's a solitaire. It will start to become a solitaire '23 onwards. We will, therefore, most likely group it under our reconciliation segments. And the likelihood that we are going to leave this business in the next 12 months, 24 months, I mean, first of all, we have to complete this big transaction to the integration potentially on IFF. So the organization will be busy with this. But my assumption is in the next 24 months, we will address the Urethanes business going forward. In terms of the straight divestiture, we have received over the last 12 months, 18 months, several offers from other strategic companies that have flagged this business as a business that could fetch EUR 400 million to EUR 600 million for the EBITDA of EUR 40 million to EUR 50 million. So this is definitely something we will consider going forward, but there is no need to hurry. And the one thing I would make to make very crystal clear. First of all, we have to make these transactions work. We need to carve out the businesses worldwide. So that we can contribute the HPM business and team up with the DSM business under the leadership of Advent and ourselves. So this will be a lot of hard work. Parallel to this, we will integrate with the different business units. Our biocides business creates a global champion here. And then in the next 12, 24 months, we will address the Urethanes business. But again, with professionalism and accuracy and therefore, it will be taken step by step. Now as far as the buyback is concerned, as I indicated before, we will, first of all, execute the closing. Once the closing is done, proceeds in the bank accounts, we will start the buyback program.

Maybe I can try a last one on these synergies. Going back to what you usually say as good [ phrases ]. What are good analysts are arguing synergies of the new joint venture might be?

Well, my recommendation to you would be read the good analysts. I've seen a few reports over the last 2 to 3 months where a lot of speculation happens. I think you know the underlying transactions in the chemical industry. There are average percentage points mentioned. The complementary of these 2 businesses is, of course, very high. So the fit is very, very strong. And therefore, I would say this is -- this is something that we really like because of the potential upsides, but I leave it up to you to figure out who the good analysts among yourselves truly are.

The next question is from Andres Castanos-Mollor of Berenberg.

Congratulations on the deal. I wanted to ask about the cost of this integration, and how long will it take to [ transfer ] the business?

That will be developed by the teams. As I said, we give currently no headline on synergies and thus no headline on costs. Everything else will be communicated in due course once the teams have formed, done their work, and then we might communicate on this. In LANXESS past practices, and I only [ speak now ] for LANXESS, we normally had a 1:1 ratio. But of course, here, we have to see, first of all, what synergy potential is and then prioritize and decide also then for the OTC costs.

All right. So any new guidance for reconciliation and adjustments.

Well, as it will be deconsolidated, you're not going to have any implications of onetime costs, et cetera, in the recon segments that would be -- I mean the entire joint venture will be shown once the closing has happened at equity consolidation.

Congratulations, again.

The next question is from Oliver Schwarz of Warburg Research.

Yes. Congrats on the deal. I've got some minor questions. You just stated that we will see the result of the joint venture at the equity level. Does that basically also means that we will see the after-tax results, including all charges, synergies and such, and is that also, let's say, reflected in -- or will that be reflected in what you might get for the 40%? Because I saw in the presentation on Page 6 stated that there is already a fixed multiple for the complete exit agreed upon. And I was just wondering what that was with or without the impact of synergies and the related restructuring costs. That's basically the foundation of my question.

Well, the value mechanisms are all based on EBITDA. And therefore, multiples, et cetera. As I said before, normally, in these kind of joint venture setups, you agree on multiples in the first place and not later on. But all value creation and evaluation mechanisms are tied to the EBITDA. And of course, it should then be rather higher than lower after synergy implementation. Now the other part of your question is purely the accounting methodology, how it's going to be reflected in the P&L, and Michael will address the equity accounting mechanisms.

Good morning, everybody, as well from my side, Oliver, yes. With regard to your question, we're pretty much following the approach, which we saw as well in the former joint venture, which we created with Saudi Aramco with ARLANXEO. So as soon as the deal will be closed, which we expect for the first half of next year, the structure in the balance sheet and in the P&L will be in a way that we will only have the one line from the equity consolidation, and we're looking on a regular basis of the -- in the development of the overall share in the joint venture, and that will then be reflected on only that one line with regards to the equity valuation.

Very clear. My second question is basically on the [ permits ] from the antitrust authorities. You already stated that you are not yet done with the full carve out of the business. I guess DSM is a bit further down the road already. Do you envisage any stumbling blocks regarding the permits for -- or respective required permits from antitrust authorities? Or is that likely to go rather smoothly from your point of view?

Well, of course, we have to do the compulsory registration with all antitrust authorities. We've made internal but also through external lawyers the assessment and come to the conclusion that this deal should with high likelihood go through. But of course, we have to go through filing by filing. And as you've seen in the overview that we have presented, we are very complementary. So as a matter of fact, we will become an even better supplier to the automotive and E&E industry going forward because we are complementary in the offering, and this should be rather a benefit than a hurdle. And therefore, our assessment is that this should go through. But of course, we have to go for the respective filing country by country, wherever it is needed.

The next question is from Martin Roediger of Kepler Cheuvreux.

Congratulations also to the deal. Most of my questions have been answered already, but two left. One is on your calculation on the enterprise value. You mentioned that -- you say it's EUR 3.7 billion, but DSM in their press release mentioned EUR 3.85 billion. So maybe you can help me where the difference is coming from? And the second question is on the future headquarter of this combined joint -- or this combined company, can you tell me where the future headquarter will be?

Well, the future headquarter that will still be figured out, also as far as the best fits from a legal tax and financial standpoint is concerned. Of course, there are certain ideas, but where the final Holdco company will be, is yet to be decided. I know at least that in the past, we decided for certain Holdco structures in certain jurisdictions, and I allude back to our past joint venture that we were setting up. But where the future Holdco is going to be will be decided by the joint venture partners. Now as far as enterprise value calculation is concerned, I can only give you the purchase price that we have agreed to. And if there's a delta between EUR 3.7 billion and EUR 3.85 billion, you might raise this question in the calculation of DSM.

The next question is from Jaideep Pandya of On Field Research.

First question is on any tax leakage from the deal, if the EUR 1.1 billion is sort of you expect to have net or is there any tax leakage or any sort of banker fees, and therefore, we should expect slightly lower than EUR 1.1 billion?. And then the second question really is basically around the new LANXESS now, and really well done and congratulations on the deal. But from my point of view, new LANXESS is more American than German, if I may say so, with like more assets in the U.S. than Europe. So when you look at new LANXESS with regards to the energy exposure based on the industrial footprint, how do you see it? Like given that natural gas these days is a very hot topic. So does the exit from HPM reduce significantly the exposure to Europe in terms of industrial assets?

Yes. As far as the first question is concerned on the EUR 1.1 billion, there will not -- this is what we are going to get. So there is no subtraction of banker's fees, et cetera. Of course, we have our own bankers in this transaction that will lead to exceptionals, but this has nothing to do with the EUR 1.1 billion we get. And as far as tax implications of that is concerned, Michael will provide color to it.

Jaideep, thank you for your question. You know that the structures depend on whether the certain [indiscernible] are being taken or different structures. You know that we, as a group, we have a tax rate of give and take in the period of 28%, but you should clearly not expect that tax rate. If you recall, the Currenta deal and Currenta transaction, we ended up with the tax rate for overall structure of around 17%. At this point in time, we expect and that is what we're currently reviewing an even lower tax rate. And with regards to the expected proceeds of EUR 1.1 billion, you should rather tax implication of give and take maybe 10%.

So and the second question, of course, HPM has round about 50% of its sales in Europe. Of course, the asset base is stronger in Europe. So your assessment that the new LANXESS will proportionately be better positioned in the respective big chemical regions is correct. And therefore, the exposure of production-wise in Europe is being reduced. We have the entire value chain to [ Cappo ], which is in Belgium. So therefore, the big [ Cappo ] site is going to, of course, enter into the joint venture like everything else, all patents, all products, all customers. So the entire business is being moved into this joint venture. And if you then look at the new LANXESS, of course, the proportional setup is more reaching a stronger focus to Europe and the United States compared to the old LANXESS, which was, of course, heavily focused on Europe.

Just finally, any update on the IFF deal, please?

No, this is a deal on DSM and HPM, and I think we focus all questions on this transaction.

Congrats.

The next question is from Chetan Udeshi of JPMorgan.

Two questions. Matthias, first is, how should we think about the portfolio now of LANXESS post this transaction? Do you think you've got the right recipe to maybe show the full potential of the business going forward? Or should we expect further ongoing portfolio changes, M&A in the future? I guess my question is, is the sector, from your perspective now, strong enough for LANXESS to demonstrate the upside in the future from the portfolio as it stands? And second question was, can you help us understand how -- like how we see cash conversion of the business -- Engineering Materials business versus the group? Is it same? Is it better? Is it lower, so that we can also understand the implications on the cash side of things.

Well, on your first question, I think the strength of the LANXESS portfolio was already pretty visible in 2020, where we shouldered the global tough Corona pandemic recession in an extremely solid way. At that point in time, in 2020, the biggest business volatility came from the automotive industry and the HPM business that basically dropped by 50, 60 percentage points and rebounded strongly then in the year after '21. But let's face it, our HPM business, a strong business, has shown in the past higher volatility. And the second element here in the margin when you look into the margin 2021 and also 2022, this business, of course, [ breathe us ] with raw material. And in the polyamide business, you are backward integrated into the benzene, cyclohexane value chain, which currently is experiencing high inflationary environments. We are strong enough to pass that on, but that led to margin dilution and also an increase in working capital. So if you look at cash conversion, HPM business, in 2021 absorbed a lot of cash because working capital was built up. It currently has built up working capital, respectively. And therefore, if you blend that out, HPM is a nice cash conversion machine like the other businesses as well. And of course, we will now have going forward, from our point of view, no longer the strong increases in working capital in the years to come because prices from our point of view have reached with Q1 and Q2 peak momentum. So again, a clear statement as far as strength of the portfolio is concerned. We have clearly given proof that the portfolio is more resilient for many years. We have established that and shown it in 2020. And we will show that also going forward. And of course, with the higher specialty nature, that should also be visible in the cash conversion.

The next question is from Peter Spengler of DZ Bank.

Congratulations on the deal. I have 2 small questions left. So Martin asked where the new company will be -- will have its headquarters. So you said it's still an ongoing process. Do you already know who will head the new company and in what form? And the second question is, do I understand it correctly, the 40% stake plus the cash of EUR 1.1 billion is a transaction to avoid a merger of equals and receive an immediate cash payment. Or is it different? Is it correct?

So the company, first of all, what we have decided will be -- it's starting with -- basically with the shareholder assembly, circa 60% goes to Advent and 40% to us. Between the companies, we have not agreed now on the Management Board, on the Executive Board. But first of all, the shareholders have been discussed and the chemical partner of Advent, [ Ron Ayles ] is a veteran in the industry, very known worldwide in the chemical industry, will most likely be the Chair from the Advent side. And most likely, I will be the Chair from the LANXESS side. And together, we will decide for the best management team out of DSM and LANXESS. So we will look at the profiles. We will look at the people in the respective businesses and decide for the top team for the A team going forward. So that's as far as your first question is concerned, and Michael will take the second one.

Peter. Yes, with regards to your second question and the question with regards to merger of equals. For us, it was very important to as well achieve the 3 goals, which we wanted to achieve with the transaction. First, to create the global player with regards to the polyamide business. Second, to finally get the proceeds to deleverage the company. And third, to have the opportunity to still be participating in that company to as well join from the upside potential, which we see in the business. And these 3 goals were perfectly now achieved with the given transaction structure.

The next question is from Andreas Heine of Stifel.

It's only a small housekeeping question. As it is now decided that you make this joint venture, is that then immediately transferred to the disposal group? So we'll be starting basically backward from the first of January of this year, seeing this as to be divested, so only shown in the asset and liability side and not anymore in the P&L.

Andreas, I will immediately take it up. As I said earlier, it will pretty much follow the way we accounted for ARLANXEO. And you are right, from now on, HPM will be accounted as discontinued operation until the closing of the transaction, and from the closing date, it will be accounted as equity.

Is that as of today or backward from the first of January?

As of today.

As of today.

Next question is from Oliver Schwarz of Warburg Research.

I also have a small technical follow-up question. Judging from the -- what you said and from the presentation, this seems to be, let's say, a 2-step project. Firstly, you built the -- or create the joint venture with Advent and then the joint venture is going to acquire DSM's activities and stated in the respective press release and in the presentation, the -- let's say, the price for the acquisition will be paid by Advent via equity and via debt. So basically, you're out of the equation when it comes to acquiring DSM's assets, when it comes to payments to DSM. I take it that the 40% stake in the joint venture you initially have might be watered down via the transaction to, let's say, a lower number because you don't participate in the payment to DSM for its assets. Would that be a fair assumption?

I'm sorry, I'm lost. Can you be specific on your question, short and precise so that everybody understands.

Okay. Okay. I'll try a different approach. First step, you and Advent create a joint venture, you basically get a 40% stake in the joint venture. That would be the first step. Is that agreed?

No, we will do this transaction for closing. So it's a [indiscernible] deal and the setup -- the target setup of the transaction once it's closed. And of course, we need to close the DSM acquisition, and we need to close the Advent acquisition of the HPM, and the target is that everything will be contributed in the target structure leading to [ 60-40 ] and the respective cash in for LANXESS of EUR 1.1 billion. There is no dilution whatsoever. So we could -- we communicated to you the target structure that according to today's valuation and mechanism will be achieved. The percentage of 40 can go down if we receive a higher cash proceeds. That's basically it. We will not pay. We will contribute our business. Are there any further questions?

Yes. The next question is from Martin Roediger of Kepler Cheuvreux.

Sorry, just 1 clarification question, on Slide 12, where you show the EBITDA of the DSM activities of around EUR 300 million. Officially, DSM talks about EUR 334 million EBITDA, and this is adjusted. So my question is either this EBITDA figure you used here in this slide is a reported figure, so including special items? Or do you also take over some costs from the headquarter or the reconciliation line at DSM? And is this also baked here in this EUR 300 million figure?

Yes. Well, in negotiations, you normally go through the quality of earnings. Sometimes there are some normalizations upward. Sometimes there are some normalizations downwards. And the EUR 310 million that we have communicated is the agreed EBITDA on the basis of which the pricing was determined.

Your next question comes from Andrew Stott, again, of UBS.

Yes. Sorry, I might have missed this. Did you state at any stage what the pro forma leverage of the JV will be financially?

I think we have not communicated this. And therefore, there is nothing new that we would say. Of course, what can be confirmed and that was prerequisite for DSM, but also for ourselves, that Advent has committed facilities and the debt financing in place. So this is contractually agreed and that's the communication I can make today that the packages have been confirmed.

Yes. There are no further questions at this time. So I'll hand back to our presenters for closing remarks.

Well, I thank you for your early participation. I would also like to thank my team and my partner for making the set. I think from all the transactions I've done over the last years, this is one of the most powerful ones. And I'm very happy that we create here something that is there to last, to create value, and eventually also see that we clearly execute our path of transforming our company, LANXESS, into a specialty group going forward. And we are excited about this. With this, we wish you a very nice week and stay tuned.

Ladies and gentlemen, this concludes the LANXESS' Conference Call. Thank you for joining, and have a pleasant day. Goodbye.