Lanxess (LXS) Investor Update summary

Strategic rationale and transaction background

• Formed a joint venture in the polymer/polyamide industry to reduce automotive exposure, improve business profile, and achieve a more balanced, less complex business with improved sustainability and financials, reducing group sales exposure to automotive and aviation to 10%.

• Achieved initial proceeds of ~€1.3bn from the first closing, exceeding market expectations, reflecting a 12x EBITDA multiple and a total enterprise value of ~€2.5bn.

• Retained a ~40% stake in the joint venture (Envalior) to capture further value post-synergy implementation, with phased monetization aligned to strategy.

• Reduced net debt from ~€3.8bn to ~€2.1bn, with proceeds prioritized for deleveraging and potential share buybacks.

• Demonstrated ongoing improvements in sustainability and CO2 emissions year over year, reducing CO2 emissions to ~2.1m tons.

Exit mechanism and financial details

• Monetization of the Envalior stake is contractually agreed, with a pre-defined exit mechanism and attractive valuation; lock-up period for the ~40% stake ends March 31, 2026.

• Exercised the right to sell the remaining stake, with notification given to the partner in September 2025; put option for 50% of shares in April 2026, subject to Advent's financing.

• The put option is based on a fixed €1.2bn value, adjusted by the ratio of last 12 months' EBITDA to the signing EBITDA of €505m; >€505m EBITDA triggers >€1.2bn valuation.

• If Advent cannot finance the purchase in 2026, a two-year period follows before an unconditional put for 50% of the shares is available in April 2028; any proceeds calculation excludes the €200m shareholder loan, which will be added separately.

• Joint exit of any remaining stake with Advent is possible post-2028, with the exit mechanism designed to ensure a predetermined, well-negotiated process.

Financial and valuation highlights

• 12x EBITDA multiple applied for monetization, with further upside potential depending on future performance.

• Rating agencies estimate Envalior's 2025 EBITDA at €380-420m, with 2024 at €310m; recent operational improvements noted.

• Valuation is based on LTM EBITDA at exercise date, with no debt adjustments.

• If EBITDA exceeds €505m, further upside is available, though current market conditions make this unlikely.

• The reference EBITDA of €505m is the original basis for the JV; current and future payouts are calculated as a percentage of this figure.