Blackstone and Celanese Corp, a global tech and specialty materials company, have agreed to form a joint venture that will create a global acetate tow supplier. According to terms of the agreement, Celanese will own 70 percent of the joint venture while Blackstone will own the remaining 30 percent. The companies have secured commitments of $2.2 billion in debt for the joint venture. At the closing of the deal, Celanese will receive $1.6 billion.
DALLAS & NEW YORK & LONDON–(BUSINESS WIRE)–Celanese Corporation (NYSE:CE), a global technology and specialty materials company, and funds managed by Blackstone (NYSE:BX), one of the world’s leading investment firms, today announced a definitive agreement to form a JV that will create a global acetate tow supplier. Celanese and Blackstone will own 70 percent and 30 percent of the JV, respectively.
Under the terms of the agreement, Celanese will contribute its Cellulose Derivatives business unit, including its equity interest in existing JVs with China National Tobacco Corporation, and Blackstone will contribute its Rhodia Acetow business unit, which it recently acquired from Solvay. The new company is expected to generate 2017 annual pro forma revenue of approximately $1.3 billion with around 2,400 employees. The JV will have an extended global footprint that includes eight wholly-owned manufacturing facilities and three existing JV sites.
The new company will be well positioned to meet customers’ current and evolving needs efficiently while providing the highest level of quality and service. The complementary nature of the tow businesses and a combination of technology expertise will result in synergies mainly from optimization of supply chain networks and procurement of raw materials, energy, equipment, and other services.
“This is an exciting opportunity for Celanese to partner with Blackstone in a way that creates significant value for all stakeholders. The combination of these tow assets will enhance our ability to serve customers more efficiently and reliably from a global production footprint while also creating growth opportunities for employees,” said Mark Rohr, chairman and chief executive officer of Celanese. “Celanese has delivered strong results in the last several years through differentiated business models. This transaction gives us the opportunity to partially monetize Cellulose Derivatives and reallocate significant capital to higher growth businesses within Celanese to accelerate our growth momentum.”
Lionel Assant, Head of Private Equity Europe at Blackstone, said: “The combination of these two companies provides an excellent opportunity to create a new, international business focused on innovation and growth to the benefit of its customers and employees. We are excited to work with Celanese on this strategic development.”
Governance and Management
Upon closing, the JV will be governed by a Board of Directors consisting of three directors appointed by Celanese and two by Blackstone. The board, management team, and name of the new company will be decided at a later date.
Related to this transaction, commitments for $2.2 billion of debt have been received by the partners on behalf of the JV. The debt is expected to be supported by cash generation at the JV and is largely non-recourse to Celanese and Blackstone.
An initial dividend of approximately $1.6 billion will be distributed to Celanese following the formation of the JV. Celanese is expected to deploy the proceeds in value uplift opportunities, including investment in organic growth, acquisitions, share repurchases and debt reduction.
Pursuant to the terms of the agreement, once approved and upon closing, Celanese is expected to consolidate JV results in its financial statements, subject to Blackstone’s minority interest.
Celanese is committed to maintaining its investment grade rating.
Approvals and Time to Close
The formation of the JV is subject to regulatory approvals and customary closing conditions, which will determine the timing of close. Until then, Celanese’s Cellulose Derivatives and Blackstone’s Rhodia Acetow will continue to operate independently.
Conference Call with Celanese Management at 8:30 a.m. Eastern, June 19, 2017
Celanese management will host a conference call tomorrow at 8:30 a.m. Eastern Daylight time. Mark Rohr, chairman and chief executive officer, Scott Sutton, chief operating officer, and Chris Jensen, chief financial officer, will be available to discuss the JV, Celanese’s broader corporate strategy, and capital allocation priorities. The Company’s presentation and prepared remarks can be found on its website at www.celanese.com under Investor Relations/Events and Presentations.
This call will be available by webcast at www.celanese.com in the Investor Relations section or by phone:
Dial-in Number: 1-866-235-9919
International Dial-in Number: 1-412-902-4105
Please ask for the Celanese Webcast
Alternatively, to enter the call immediately without waiting for operator assistance, attendees may pre-register for the call by clicking the link below. Once registered, attendees will receive an Outlook calendar invite with the date and time of call, the dial-in phone number and the unique attendee pin which is sent automatically to the email address provided.
An audio replay and transcript of the webcast will be available at the same link. The materials will be filed with the Securities and Exchange Commission on a Form 8-K prior to the call.
Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Our two complementary business cores, Acetyl Chain and Materials Solutions, use the full breadth of Celanese’s global chemistry, technology and business expertise to create value for our customers and the corporation. As we partner with our customers to solve their most critical business needs, we strive to make a positive impact on our communities and the world through The Celanese Foundation. Based in Dallas, Celanese currently employs approximately 7,500 employees worldwide and had 2016 net sales of $5.4 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com or our blog at www.celaneseblog.com.
All registered trademarks are owned by Celanese International Corporation or its affiliates.
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About Rhodia Acetow
Rhodia Acetow, headquartered in Freiburg, Germany, is a global leader in cellulose acetate tow used in the manufacturing of cigarette filters. It operates plants in Germany, Brazil, France, Russia and the USA.