Celanese and Blackstone to Form Joint Venture in Acetate Tow
Sun, June 18 2017
Brings together complementary tow portfolios to drive innovation and enhance cost competitiveness;
Proceeds from transaction to be deployed in high-growth businesses
at
- Proposed joint venture (JV) to combine Celanese’s Cellulose Derivatives and Blackstone’s Rhodia Acetow businesses.
- Combination to create a global acetate tow supplier with increased ability to serve customers efficiently and reliably while enhancing opportunities for innovation and productivity.
-
Celanese andBlackstone will own 70% and 30% of the JV, respectively. -
JV to distribute
$1.6 billion in cash toCelanese at close. -
Transaction to be earnings per share neutral for
Celanese in the first year and accretive thereafter.
Transaction Overview
Under the terms of the agreement,
The new company will be well positioned to meet customers’ current and evolving needs efficiently while providing the highest level of quality and service. The complementary nature of the tow businesses and a combination of technology expertise will result in synergies mainly from optimization of supply chain networks and procurement of raw materials, energy, equipment, and other services.
“This is an exciting opportunity for
Governance and Management
Upon closing, the JV will be governed by a Board of Directors consisting
of three directors appointed by
Financial Highlights
Related to this transaction, commitments for
Pursuant to the terms of the agreement, once approved and upon closing,
Approvals and Time to Close
The formation of the JV is subject to regulatory approvals and customary closing conditions, which will determine the timing of close. Until then, Celanese’s Cellulose Derivatives and Blackstone’s Rhodia Acetow will continue to operate independently.
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About
All registered trademarks are owned by
About
About Rhodia Acetow
Rhodia Acetow, headquartered in Freiburg,
Forward-Looking Statements
This release may contain "forward-looking statements," which include
information concerning the Company's plans, objectives, goals,
strategies, future revenues, synergies or performance, financing needs
and other information that is not historical information. All
forward-looking statements are based upon current expectations and
beliefs and various assumptions, including the announced joint venture.
There can be no assurance that the Company will realize these
expectations or that these beliefs will prove correct. There are a
number of risks and uncertainties that could cause actual results to
differ materially from the results expressed or implied in the
forward-looking statements contained in this release, including with
respect to the joint venture. These risks and uncertainties include,
among other things: changes in general economic, business, political and
regulatory conditions in the countries or regions in which we operate;
the length and depth of product and industry business cycles,
particularly in the automotive, electrical, textiles, electronics and
construction industries; changes in the price and availability of
raw materials, particularly changes in the demand for, supply of, and
market prices of ethylene, methanol, natural gas, wood pulp and fuel oil
and the prices for electricity and other energy sources; the ability to
pass increases in raw material prices on to customers or otherwise
improve margins through price increases; the ability to maintain plant
utilization rates and to implement planned capacity additions and
expansions; the ability to reduce or maintain their current levels of
production costs and to improve productivity by implementing
technological improvements to existing plants; the ability to identify
desirable potential acquisition targets and to consummate acquisition or
investment transactions consistent with the Company's strategy;
increased price competition and the introduction of competing products
by other companies; changes in the degree of intellectual property and
other legal protection afforded to our products or technologies, or the
theft of such intellectual property; compliance and other costs and
potential disruption or interruption of production or operations due to
accidents, interruptions in sources of raw materials, cyber security
incidents, terrorism or political unrest or other unforeseen events or
delays in construction or operation of facilities, including as a result
of geopolitical conditions, the occurrence of acts of war or terrorist
incidents or as a result of weather or natural disasters; potential
liability for remedial actions and increased costs under existing or
future environmental regulations, including those relating to climate
change; potential liability resulting from pending or future litigation,
or from changes in the laws, regulations or policies of governments or
other governmental activities in the countries in which we operate;
changes in currency exchange rates and interest rates; our level of
indebtedness, which could diminish our ability to raise additional
capital to fund operations or limit our ability to react to changes in
the economy or the chemicals industry; and various other factors
discussed from time to time in the Company's filings with the
In addition to the risks and uncertainties identified above, the following risks and uncertainties, among others, could cause the Company’s actual results of operations regarding the joint venture to differ materially from the results expressed or implied in this press release: the timing or ultimate completion of the transaction as the transaction is subject to closing conditions, including antitrust clearance; the expected benefits of the transaction may not materialize as expected; ability to successfully implement the integration strategy for the joint venture; and the ability to ensure continued performance or market growth of the combined tow businesses. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Non-GAAP Financial Measures
Presentation
This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and the Consumer Specialties segment. The Company’s cellulose derivatives business is included in the Consumer Specialties segment.
Use of Non-US GAAP Financial Information
This release uses the following Non-US GAAP measures: adjusted EBIT,
adjusted EBIT margin, adjusted earnings per share, return on invested
capital (adjusted) and free cash flow. These measures are not recognized
in accordance with US GAAP and should not be viewed as an alternative to
US GAAP measures of performance or liquidity. The most directly
comparable financial measure presented in accordance with US GAAP in our
consolidated financial statements for adjusted EBIT is net earnings
(loss) attributable to
Definitions of Non-US GAAP Financial Measures
Adjusted EBIT is a performance measure used by the Company and is
defined by the Company as net earnings (loss) attributable to
Adjusted EBIT by core (i.e. Acetyl Chain and/or Materials Solutions) may also be referred to by management as core income. Adjusted EBIT margin by core may also be referred to by management as core income margin. Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT margin by business segment may also be referred to by management as segment income margin.
Adjusted earnings per share is a performance measure used by the
Company and is defined by the Company as earnings (loss) from continuing
operations attributable to
Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a of our Non-US GAAP Financial Measures and Supplemental Information document summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
Return on invested capital (adjusted) is defined by the Company as
adjusted EBIT, tax effected using the adjusted tax rate, divided by the
sum of the average of beginning and end of the year short- and long-term
debt and
Free cash flow is a liquidity measure used by the Company and is
defined by the Company as cash flow from operations, less capital
expenditures on property, plant and equipment, and adjusted for capital
contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui")
related to our methanol joint venture,
Reconciliation of Non-US GAAP Financial Measures
Reconciliations of the Non-US GAAP financial measures used in this
press release to the comparable US GAAP financial measure, together with
information about the purposes and uses of Non-US GAAP financial
measures, are included in our Non-US GAAP Financial Measures and
Supplemental Information documents dated
Results Unaudited
The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.
Supplemental Information
Additional information about our prior period performance is included in our Quarterly Reports on Form 10-Q and in our Non-US GAAP Financial Measures and Supplemental Information document.
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Investor Relations
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j.kurth@celanese.com
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andrew.dowler@blackstone.com
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