Celanese, the industrial chemicals company, has become Blackstone Group’s second major deal announcement in quick succession.
BCP Crystal Acquisition, a German limited partnership controlled by Blackstone funds, has made a voluntary takeover offer for all the outstanding shares of Kronberg-based Celanese. The E32.50 per share offer – which implies a transaction value of around E3.1bn – is above the firm’s all-time high share price and represents a 46 per cent premium to its average daily volume-weighted share price in 2003.
The deal, which follows Blackstone’s announced takeover of German waste manager Sulo last week for E700m, is notable for several reasons. As well as being one of Europe’s largest management buyouts so far this year, it is also the largest public-to-private offer in Germany to date and the first dual jurisdiction tender offer in Germany and the US since the Takeover Act was enacted in Germany at the beginning of 2002.
Celanese is listed on both the Frankfurt and New York stock exchanges, having been a US company before being acquired by Hoechst, which then spun it off via an IPO in 1999. The spin-off was part of a disposal programme launched at the time of Hoechst’s merger with Rhone Poulenc to form Aventis, which resulted in the combined entity’s exit from all non-pharma activities.
The latest deal was led in Germany by Blackstone’s Hanns Ostmeier. He worked on the public-to-private of water management firm Friedrich Grohe in 1999 during his seven years at BC Partners prior to joining Blackstone to head up its new Hamburg office in September 2003. At the time, Friedrich Grohe was the largest leveraged buyout in Germany, with a total value estimated at approximately E1.3bn.
Ostmeier said the Celanese deal is ‘more complex’ than Grohe due to its dual-track nature. But he added that this was also an advantage for Blackstone given its experience of US capital markets. The offer, which is dependent on antitrust clearance, requires a minimum acceptance level of 85 per cent of issued ordinary shares. Kuwait Petroleum Company, which is Celanese’s largest shareholder with a 29 per cent stake, has ‘undertaken to accept’ the offer. Ostmeier said he expects the deal to complete in March 2004.
Ostmeier said Blackstone would support the existing management team’s strategy to focus Celanese on core expertise. “We will make capital available for add-on acquisitions to parts of the business, while the management team will continue to dispose of subsidiaries in other areas,” he said. The strategy has had a positive impact on the company’s fortunes so far, with the share price having almost doubled from its 1999 issue price of E16.
Ostmeier confirmed that Blackstone would arrange approximately $460m (E380m at current exchange rates) of pre-funding for Celanese’s pension funds, which have a total deficit of just over E1bn. He declined to disclose the amount of equity being invested by Blackstone due to restrictions imposed by BAFin, the German banking regulator. Morgan Stanley and Deutsche Bank have provided debt finance commitments for the transaction.
Celanese operates in areas such as acetyl products, chemical intermediates and acetate products. It posted revenues of E4.3bn in 2002 and employs 10,700 people around the world.
Ostmeier said more opportunities remain in Germany where companies that have emerged from a restructuring programme and put in place a new strategy are now seeking support and funds for further growth.
Blackstone, which was founded in 1985, raised the $6.45bn Blackstone Capital Partners IV fund in July 2002. Headquartered in New York, the firm has offices in London and Hamburg.