Blackstone remains confident on Celanese

Following significant arbitrage activity, The Blackstone Group has lowered the level of shareholder acceptances required to complete its €3.1bn bid to take Celanese private.

The Blackstone Group has announced that winning 75 percent of shareholder votes would be sufficient for the firm to proceed with its proposed public-to-private transaction for Celanese, the German chemicals logistics business.

When Blackstone first revealed terms of its €32.50 per share offer in December, which values the company at €3.1 billion, it said an acceptance threshold of 85 percent of shares being tendered had been agreed with Celanese.

Under German takeover rules, in order to be able to reduce the threshold to 75 percent, Blackstone was required to also extend the bidding period by two weeks. Initially set to close on March 15, the offer will now expire on March 29.

Under the rules, there are two acceptance levels that determine the outcome of a public-to-private offer. Securing at least 95 percent of all shares during the tender process is required to ‘squeeze out’ a target’s remaining shareholders and acquire all outstanding shares.

75 percent is the minimum needed to implement a so-called domination agreement, allowing a bidder to take control of a target regardless of whether the remaining shareholders decide to retain their positions or sell up. 

According to a source close to the transaction, Blackstone decided to move to the lower threshold in light of arbitrageurs having built large positions in Celanese stock in the hope of a higher offer materialising.

Hedge funds are thought to currently hold more than 20 percent of Celanese’s equity. These investors are likely to suffer losses on their recently built positions in the event of Celanese not being sold. There are currently no rival offers for the company.

“Blackstone remains confident that what they have put on the table is a good price,” the source said. “They remain committed to acquiring 100 percent of the shares, but they wanted to avoid a situation where coming in at just under the initial 85 percent target would have forced them to abandon the deal altogether.”

There has been some shareholder comment recently that Blackstone’s €32.50 per share offer for the business, at a 13 percent premium over the average share price of the past 90 days, was too low. According to the Financial Times, just over 50 percent of Celanese stock had been tendered by Friday of last week. 

However, the private equity firm has the support of Celanese’s management as well as the Kuwait Petroleum Corporation, which controls 29 percent of the shares.