US Celanese to form acetate tow joint venture with private equity firm Blackstone

LONDON (ICIS)–Celanese is to form a joint venture with fund manager Blackstone to combine their acetate tow business, the US chemical producer said late on Sunday.

Celanese will own 70% of the business, while Blackstone will hold a 30% stake, according to the producer.

The company said it will received an initial dividend of approximately $1.6bn after the formation of the joint venture, adding it would use the proceeds to pursue growth and acquisition opportunities, as well as reduce debt and purchase some of its own shares.

The company did not disclose a potential closing date for the transaction, which is subject to regulatory approvals “which will determine the timing” of close.

The move follows Blackstone acquisition of Belgium chemical major Solvay’s acetate two business in 2016 for around €1.0bn.

The joint venture will combine Cellulose Derivatives division and Blackstone’s Rhodia Acetow business.

The joint venture is expected to generate around $1.3bn in annual pro-forma revenues, Celanese said. The combined company will have around 2,400 employees across eight wholly-owned manufacturing facilities and three existing joint venture sites.

“Under the terms of the agreement, Celanese will contribute its Cellulose Derivatives business unit, including its equity interest in existing JVs [joint ventures] with China National Tobacco Corporation, and Blackstone will contribute its Rhodia Acetow business unit,” said Celanese.

$2.2bn of debt has been received by the partners on behalf of the joint venture, but the sum is expected to be offset by cash flow at the business, with the sum being largely non-recourse to Celanese and Blackstone.

Acetate tow is mainly used to produce cigarette filters, among other products.

(Pictured above: Cigarette filters are one of the main end markets of acetate tow. Source: Michaela Begsteiger/imageBROKER/REX/Shutterstock)