For now, US Celanese sees little value in splitting company – CEO

Al Greenwood

22-Oct-2019

HOUSTON (ICIS)–Celanese sees little value in splitting up the company, but it left open the possibility in the future, the CEO of the US-based acetyls and polymer producer said on Tuesday.

“To split the company as it is today really wouldn’t add value to the shareholder because of the disynergies associated with the split,” said Lori Ryerkerk, CEO. She made her comments during an earnings conference call.

Those disynergies refer to the costs inherent in splitting up one company into two, such as finding a new CEO and putting together a new management team as well as adding additional back-office resources, Ryerkerk said. “There is always going to be a certain amount of disynergy associated with that.”

At one time, those disynergies approached $100m, said Scott Richardson, chief financial officer. The company has brought figure down below $50m, and the company considering other ways to lower it further, such as through taxes.

Ryerkerk said that Celanese may need to take on some additional transformational activity before the company could justify splitting itself up. she did not specify what that activity could be.

Earlier in October, Bloomberg reported that Celanse was undertaking a strategic review that could include breaking up the company.

“We regularly use advisers to help us evaluate options,” Ryerkerk said during the call. “It’s an ongoing activity for us. That hasn’t changed, and quite frankly, there is really no change in our philosophy around whether or not it’s attractive to split the company.”

Liker her predecessor, Mark Rohr, Ryerkerk said Celanese will pursue any type of deal that will provide the most benefit to its shareholders.

Celanese has not specified the shape of any possible breakup. But one likely scenario would separate its two largest businesses, Acetyls and Engineered Materials.

The following table shows what each makes.

Engineered Materials Acetyls Chain
Polyoxymethylene (POM) Acetic acid
UHMWPE VAM
Polybutylene terephthalate (PBT) Acetic anhydride
Long-fibre reinforced thermoplastics Acetaldehyde
Liquid crystal polymers Ethyl acetate
Thermoplastic elastomers Formaldehyde
Nylon compounds Butyl acetate
PP compounds
Polyphenylene sulphide
Acesulphame potassium
Potassium sorbate
Sorbic acid

The third and smallest business of Celanese is Acetate Tow. Celanese did attempt to create an acetate-tow joint venture with Blackstone in 2017. The two companies abandoned the proposal in 2018 after hitting an impasse with European regulators.

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