The long anticipated IPO of chemical manufacturer Celanese Corporation, a portfolio company of New York private equity firm The Blackstone Group, priced today on the New York Stock Exchange at values 15 percent to 25 percent below the offering range originally anticipated by the private equity firm.
Celanese will generate approximately $800 million (€615 million) through the IPO, floating 50 million shares of common stock at $16 per share. The price fell below the initial range of $19 to $21 documented in filings with the Securities and Exchange Commission earlier this year. At the discretion of the company’s underwriters, an additional $120 million may be raised within the next 30 days through an over-allotment option of 7.5 million shares.
The reduction in price was reportedly due to weak demand among buyers and uncertainty over the company’s valuation. Although Celanese has yet to complete its fourth quarter financial statements, the company noted in SEC filings that it expected to incur “significant charges” in the fourth quarter of 2004 related to its compensation plan, impairment losses associated with a business disposition and restructuring charges connected with a joint venture.
Investors also reportedly took issue with the significant dividend, $952 million, which Blackstone and other investors were supposed to receive with the proceeds of the IPO. Following the offering, Blackstone will still own a majority of the company.
A spokesperson for Blackstone was unable to comment, citing 'quiet period' restrictions on insiders.
An article in Barron’s earlier this week suggested that while the IPO would be profitable for Blackstone, it wouldn’t represent a great value for new investors due to relatively low earnings and a recent decline in other chemical stocks.
The Celanese IPO comes just nine months after Blackstone invested $650 million of equity to acquire the company in a public-to-private transaction valued at €3.1 billion, the largest such transaction in Germany to date. Shortly thereafter, the private equity firm was able to pull a $500 million dividend out of the company following a high-yield offering.
Blackstone is no stranger to quick flips. At the end of last year, Blackstone generated a reported paper profit of four times its investment in coal producer Foundation Coal, taking the company public less than six months after acquisition.