Lanxess AG said Tuesday that it would join with private-equity firm Advent International Corp. to buy Royal DSM NV’s DSM, +12.32% engineering-materials business for around 3.7 billion euros ($ 3.99 billion) and create a new venture for high-performance plastics.
The announcement came after the Netherlands-based DSM said earlier Tuesday that it would merge with Swiss fragrance company Firmenich SA to create a company with a EUR25 billion market cap.
The DSM engineering-materials business, which would become part of the joint venture, represents sales of around EUR1.5 billion and operating-profit margin of around 20%, Lanxess LXS, +10.13% said.
The German chemical company said it would also transfer its own high-performance materials business into the joint venture, and receive EUR1.1 billion initially and a stake of up to 40% in the new business.
Lanxess said it would use the proceeds to reduce debt and launch a EUR300 million share-buyback program.
Advent will hold at least 60% in the joint venture, Lanxess said.
The deal is expected to close in the first half of 2023, subject to approval by authorities, Lanxess said.
Write to Ed Frankl at edward.frankl@dowjones.com