DuPont sells its Mobility & Materials business to Celanese
Celanese Corporation, a global chemical and specialty materials company based in Irving, Texas, U.S.A., is acquiring the bulk of the Mobility & Materials (M&M) business of DuPont for USD11 billion in cash.
Combined, these businesses generated net sales of approximately USD3.5 billion and operating EBITDA of approximately USD0.8 billion in 2021.
“Today’s announcement represents a significant milestone in DuPont’s transformation as a premier multi-industrial company building upon our recent acquisition of Laird Performance Materials and our intended acquisition of Rogers Corporation to further define DuPont as a market leader in the areas of electronics, water, industrial technologies, protection and next generation automotive,” said Ed Breen, executive chairman and chief executive officer of DuPont, based in Wilmington, Delaware, U.S.A.
The transaction, subject to regulatory approvals and customary closing conditions, is expected to close around the end of 2022.
“The acquisition of the M&M business is an important strategic step forward and establishes Celanese as the preeminent global specialty materials company,” said Lori Ryerkerk, chairman and chief executive officer of Celanese. “For nearly a decade, we have implemented, enhanced, and increasingly extended the Engineered Materials (EM) commercial model to generate shareholder value. M&M will be a high-quality addition to EM and will unlock significant opportunities to generate further customer and shareholder value. “
“The M&M business is a uniquely complementary specialty materials asset to EM, spanning product, geography, and end-market,” said Tom Kelly, senior vice president, Engineered Materials, Celanese. “This acquisition greatly enhances the EM product portfolio by adding new polymers, industry renowned brands, leading product technology, and backward integration in critical polymers. We are eager to combine the product and technology leadership of M&M with the commercial excellence and customer engagement model of EM to accelerate our growth in high-value applications including future mobility, connectivity, and medical.”
The M&M business is a global producer of engineering thermoplastics and elastomers serving a variety of end uses including automotive, oil and gas, electrical and electronics, consumer goods, and industrial applications. The acquired M&M product portfolio includes materials such as nylons (PA 66, PA 6), specialty nylons (HPPA, LCPA, filaments), polyesters (PET and PBT), and elastomers (TPC and EAE).
As part of the transaction, Celanese will acquire a global production network of 29 facilities, including compounding and polymerization. It will also gain an intellectual property portfolio including approximately 850 patents with associated technical and R&D assets and approximately 5,000 skilled employees across the manufacturing, technical, and commercial organizations.
DuPont is separately advancing the process to divest the Delrin® business which was included in the scope of the strategic review process the company announced on November 2, 2021. The company is targeting a closing date for the sale of Delrin® in the first quarter 2023.
“Delrin® acetal homopolymer (H-POM) is an industry leading technology utilized by customers around the world to meet their most demanding needs,” Breen said. “There is substantial interest in this high-quality asset and I am confident that the anticipated sale of Delrin® will generate additional value for DuPont shareholders.”
The Auto Adhesives, Multibase and Tedlar® product lines within the Mobility & Materials segment are not included in the scope of the intended divestitures. In aggregate, the retained M&M businesses generated net sales of approximately USD0.95 billion and operating EBITDA of approximately USD0.12 billion in 2021.
Within the first four years following the close of the transaction, Celanese expects to achieve run rate synergies of approximately USD450 million as a result of the highly complementary fit of the businesses. The acquisition is expected to be immediately accretive to adjusted earnings per share with anticipated accretion of USD4.00 or more per share once full synergies are achieved by 2026.
The acquisition is expected to be fully-financed with committed debt financing at the time of closing. Significant expansion of free cash flow and swift deleveraging is expected to support a reduction of total debt to below 3.0x EBITDA within two years of closing the transaction.
Celanese was advised by Kirkland & Ellis LLP as principal legal counsel, Gibson, Dunn & Crutcher LLP as financing counsel, and BofA Securities as financial advisor.
DuPont intends on using the net proceeds from the divested M&M businesses to fund the previously announced acquisition of Rogers Corporation and further M&A opportunities in addition to continuing share repurchases.
Goldman Sachs & Co. LLC is serving as DuPont’s financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.
DuPont has agreed to retain and indemnify Celanese for certain liabilities, including liabilities relating to per- and polyfluoroalkyl substances (PFAS), a group of manufactured chemicals that have been used in industry and consumer products since the 1940s, but whose long-term effects are still unknown.
Correction: An earlier version of this story stated that the Celanese acquisition includes the Molykote Specialty Lubricants business. DuPont has clarified that the Molykote Specialty Lubricants business is not part of this acquisition, as the business line is part of DuPont’s Electronics & Industrial business, not the Mobility & Materials business.
