Blackstone files Celanese bid with German authorities

15 January 2004 17:57  [Source: ICIS news]

FRANKFURT (CNI)--BCP Crystal Acquisition GmbH, the vehicle founded by US-based private equity company Blackstone Capital Partners to acquire German chemical producer Celanese, has filed its bid with German financial services authority Bafin, CNI learned today. 

Bafin has 15 working days to study and approve the documents. The bid was submitted on 13 January. Celanese's management is expected to recommend that shareholders accept the Euro3.1bn ($4bn) offer.

   Claudio Sonder
The Euro32.50 per share takeover offer, which Celanese chief executive Claudio Sonder described in December 2003 as “friendly”, is also subject to cartel authority approval.

In documents published recently on the company’s acquisition website (, Blackstone revealed that it intends to sign a profit transfer agreement with Celanese. To this extent, it wants to acquire all shares of the German group.

At least 85% of Celanese shareholders will have to tender for the takeover to go ahead. If Blackstone obtains 95% of equity it can squeeze out the remaining shareholders and de-list the company. In December, Sonder said that, privately-owned, Celanese would have more flexibility than as a pure stock company.

The documents reveal that the chemical company’s largest shareholder, Kuwait Petroleum, agreed in advance to sell its 29% stake. German investment fund DWS Deutschland meanwhile has replaced Celanese in its portfolio with potash producer Kali+Salz.

Blackstone plans to finance the takeover in part through Euro1.6bn in bridge loans backed by Morgan Stanley and Deutsche Bank. According to reports citing banking sources, the equity group will be looking to refinance the Euro 1.6bn with high-yield bonds.

The total acquisition bid price of Euro3.1bn includes funding to make up a pension deficit of Euro380m and assumption of Euro400m in net debt.

In a letter to Celanese management published along with the other documents, Blackstone chief executive Stephen Schwarzman said the private equity company stood by its commitment to the acquisition - evidently negotiated well before the official 16 December agreement - despite a number of adverse factors that had meanwhile emerged.

Schwarzman pointed to Celanese’s “depressed” financial results and additional lowered earnings projections as being factors of concern. he also added that the appreciation of the euro, unspecified “additional liabilities discovered during due diligence” and the need for excess liquidity to provide a “high level of cushion for the business” were further concerns.

He said Blackstone has “been able to arrange an attractive capital structure for Celanese that provides for substantial excess liquidity in excess of Euro450m and flexibility”.

Schwarzman’s letter expressed support for Celanese management’s restructuring initiatives and confirmed that Blackstone views the Nutrinova food additives business as non-core. It said also that the company was willing to fund acquisitions in engineering plastics subsidiary’s Ticona POM and UHMW-PE businesses and along the group’s acetyls chain.

To this end, the letter said Blackstone “believes that a greater degree of forward integration (for example, through further consolidation of the emulsions industry) will expand overall segment margins, reduce earnings volatility and increase the company’s valuation multiple”.

Schwarzman noted also that the equity group agrees with Celanese management that the acetate business “should be managed for cash flow generation while positioning itself for success in China and Eastern Europe”.
By: Dede Williams
+44 20 8652 3214

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