Celanese sees 'more to come from M&A'
STRATEGIC SNAPSHOT03 FEB 2017
Celanese [NYSE:CE], the Irving, Texas-based provider of materials to the chemicals, paints and coatings industries, anticipates more acquisitions following its recent agreements to buy nylon-focused assets, according to CEO Mark Rohr.
On the 4Q16 earnings call held 1 February, Morgan Stanley analyst Vincent Andrews asked if the company’s latest acquisition, Nilit’s plastics division, represented the extent of Celanese’s interest in nylon or if the was more to come.
“There's more to come from M&A in general,” the CEO replied, noting that the company had started by focusing on nylon as it was the fastest growing component in some markets due to its high-temperature applications. “So, could we do more, yes. Will we do more acquisitions, heck, yes [to] that.”
Rohr added Celanese was looking for technology and market access, rather than being focused on the size of the target's offering.
Asked if the most recent nylon buy placed the company where it wanted to be in terms of size, scale and scope, EVP and President, Materials Solutions Scott Sutton said it had not yet reached its targets.
“We did some organic work. We acquired SO.F.TER. (Group) that had a nylon business. Nilit has a higher value nylon business. Now we're pulling all that together and there's probably one more step to go,” Sutton said.
Later on the call, KeyBanc's Michael Sison asked in which areas Celanese would focus its M&A efforts.
“It is our intention to continue to continue to add bolt-on acquisitions,” CEO Rohr said, defining these as deals that could be quickly assimilated and were of a reasonable size and scope. “There are a lot of things we're looking at, but I'll ... not say exactly what they are.”
Asked if Celanese would consider a joint venture with a nylon producer, Rohr said the company would if it made sense. He added while Celanese was comfortable with its current position, having access to specialty nylons could be attractive.
Celanese organizes its products into six segments: Engineered Materials, Cellulose Derivatives, Intermediate Chemistry, Food Ingredients, EVA Polymers and Emulsion Polymers.
The company announced Wednesday its agreement to buy Nilit Plastics, the nylon compounding division of Israel-based nylon polyamide fibers manufacturer and thermoplastics engineer Nilit, for an estimated cash consideration of around USD 233m.
In October last year, Celanese agreed to acquire Italy-based thermoplastic compounder SO.F.TER. for an undisclosed sum.
Celanese used Italy-based Chiomenti for the latter deal, along with O’Melveny & Myers, and Germany- and Brazil-based law firms. Legal advisors used in previous years include Bingham McCutchen and Freshfields Bruckhaus Deringer, while Germany's Hengeler Mueller has been used multiple times in the past. Financial advisory is typically handled in-house on the buy side.
Celanese ended 2016 with cash of around USD 600m. The company has a market capitalization of USD 12.8bn.