Frankfurt: Lanxess AG soared in Frankfurt trading after Warren Buffett’s General Reinsurance AG unit bought a 3% stake, placing the US investor among the top six shareholders of the German chemicals company.
The stock rose as much as 6.8%, erasing an earlier decline, after the stakeholding was disclosed in a statement to the stock exchange on Monday. Buffett, who as chairman and largest shareholder in Berkshire Hathaway Inc. is the world’s fourth-richest person with a net worth of $74.5 billion, purchased the shares on 19 May, according to the notification. Lanxess stock, which was also trading ex-dividend, gained 6% to €66.30 as of 2:34 pm in Frankfurt, a one-year high.
Lanxess chief executive officer Matthias Zachert is transforming the Cologne-based company into one of the biggest makers of additives for lubricants and flame retardants following the $2.4 billion purchase last year of Chemtura Corp. and after putting the company’s rubber operations into a joint venture with Saudi Aramco. Before the Buffett stake was announced, the shares had fallen 8% since 11 May, when Zachert said he expected growth rates to slow in the second half of the year, taking the shine off first-quarter earnings that beat analyst estimates.
Berkshire Hathaway has been pursuing investments in Germany, and earlier this year agreed to buy Wilhelm Schulz GmbH, a maker of piping components in the country. In chemicals, the conglomerate owns Lubrizol in the US.
The stock trails Germany’s MDAX Index for medium-sized companies this year, climbing 6.9%, compared with a 14% increase in the mid-cap benchmark. A €71.13 average target price among analysts that cover the company implies upside of more than 7%. 11 analysts have buy ratings, while 15 recommend holding the shares and one advises selling, according to data compiled by Bloomberg.
Allianz SE, Blackrock Inc. and Norway’s sovereign wealth fund are the biggest shareholders, with stakes ranging from 5%to 6%, according to data compiled by Bloomberg. Bloomberg
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