Saudi Aramco has announced its decision to buy the remaining 50 per cent stake of its joint venture (JV) with German specialty chemicals company Lanxess for $1.74bn.

The move will make Aramco the sole owner of Arlanxeo, which was set up in 2016 as part of Lanxess' pivot away from low-margin commodity chemicals toward more profitable specialty business lines.

The Arlanxeo JV, which is based in the Netherlands, is valued at over $3bn, and generated total sales worth $11.25bn last year.

The two companies had originally planned a lock-up period until 2021 for both partners, Lanxess said. The transaction is now expected to close by 31 December 2018, subject to regulatory approvals, Aramco said in its statement.

Lanxess said it plans to use the proceeds to strengthen its financial basis and reduce net financial debt.

The acquisition is set to “enhance Saudi Aramco’s sustainability efforts” particularly in the field of tire performance-related fuel consumption, with potential savings of almost 7 per cent, Aramco said.

‘As a fully owned subsidiary of Saudi Aramco, Aralanxeo will accelerate the development of growth opportunities in the Kingdom, leveraging the strong feedstock position of Saudi Aramco’, the Aramco statement read.

‘Arlanxeo would continue to serve the development, production, marketing, sale and distribution of specialty chemicals and synthetic rubber products, principally for the high-volume global tire and automotive industries’.

The company would maintain its current base in Maastricht in the Netherlands.