Former target Lenzing buys CVC business

CVC Capital Partners, the pan-European private equity firm, has sold a subsidiary of portfolio company Acordis to Lenzing, the Austrian fibre maker CVC tried unsuccessfully to merge with Acordis in 2001.

Tencel, a UK-based subsidiary of Dutch fibre producer Acordis, which is 64 percent-owned by CVC Capital Partners, has been sold to Austrian fibre maker Lenzing for an undisclosed sum. 

CVC was reported to be “heavily disappointed” at the European Commission’s decision to block its attempted €700 million takeover of Lenzing in October 2001. CVC, which would have merged Lenzing with Acordis, was told that such a move would create too much of a dominant force in man-made fibres, with a share of up to 85 percent in some European markets.

The decision meant the 80 percent stake in Lenzing that CVC would have acquired remained with B&C Holding, a unit set up by Bank Austria to dispose of its industrial stakes. B&C Holding remains Lenzing’s majority shareholder.

In a statement, Lenzing said the acquisition of Tencel was effective immediately. It added that it did not expect any regulatory problems, as Tencel’s sales of €100 million ($119 million) a year placed it below the threshold for reporting to the European Union’s competition authority.

Tencel is a producer of Lyocell, the generic name for fibres made of pulp. The firm’s production capacity totals 80,000 tons per year at large-scale plants in Grimsby, UK, and Mobile, Alabama. Lenzing’s current Lyocell production facility in Heiligenkreuz, Austria, produces 40,000 tons per year.

CVC acquired a 64 percent stake in Acordis from Akzo Nobel for €825 million in 1999. The deal saw the management team acquire a 15 percent holding and the vendor retain 21 percent.

In its 2003 results Lenzing, which is listed on the Vienna Stock Exchange, attributed disappointing performance in its European textile fibres and non-wovens businesses to “persistent sluggish cyclical activity…and the drastic decline of the dollar rate”. The firm saw sales fall from €625.6 million in 2002 to €621.9 million last year on EBITDA down from €121.3 million to €115.8 million. The firm highlighted improved trading in Asia, especially China.