It’s one of the year’s biggest acquisitions so far, and the biggest chemicals deal since 2020.
Celanese Corp., based in Irving, is buying a majority of DuPont de Nemours Inc.’s mobility and materials division for $11 billion in cash.
According to Celanese, the acquisition comprises a portfolio of engineered thermoplastics and elastomers, intellectual property, and 29 global manufacturing facilities. According to Bloomberg, it is one of the top five largest deals of the year so far, and the largest chemicals deal since 2020.
In a statement, Celanese chairperson and CEO Lori Ryerkerk said, “The purchase of the M&M business is an important strategic step forward and strengthens Celanese as the foremost global speciality materials company.” “We are excited to welcome the M&M team to Celanese and work together to accelerate the combined Celanese portfolio’s future growth and cash generation.”
According to Tom Kelly, Celanese senior vice president of engineered materials, the DuPont company will extend Celanese’s engineered materials capabilities for future mobility, connectivity, and medical applications. Celanese produces chemicals that are utilized in a variety of products, including cigarette filters and paints.
“The deal is a transformative positive” for Celanese’s engineered materials business division, according to Wells Fargo analyst Michael Sison, who added that it “doubles its size and breadth.”
Celanese said the transaction positions it for growth as electric vehicles expand in popularity and manufacturing, according to an investor presentation.
DuPont’s mobility and materials division employs 5,000 people who manufacture polymers and resins for the automotive, electrical and electronics, consumer products, and industrial markets. This year, the company is forecast to produce sales of around $3.8 billion.
Celanese, whose revenue increased by 51% to $8.5 billion last year, expects the deal to boost earnings by $4 or more per share by 2026. Its stock dropped over 8% to $144.25 on Friday after an initial pre-market rise.
“Historically, M&M has been a solid cash flow producer. Celanese Chief Financial Officer Scott Richardson stated, “We are optimistic in our ability to achieve synergies that will allow us to treble Celanese total free cash flow within the next five years.”
The deal is likely to be completed later this year. DuPont agreed to pay $5.2 billion for Rogers Corp. in November and said it planned to sell the majority of its mobility and materials segment.
According to Bloomberg, private equity firms Apollo Global Management Inc. and Carlyle Group Inc. had expressed interest in the DuPont operation.
Celanese has also been hinting at its desire to be an acquirer for months.
Last July, it paid $1.15 billion for the Santoprene business of Exxon Mobil Chemical Co. Santoprene is a significant manufacturer of TPV, a high-performance chemically cross-linked material utilized in the automotive, construction, and medical industries.
Santoprene’s acquisition “foreshadows more bolt-ons, likely within the unique engineered materials portfolio,” according to Bloomberg Intelligence analyst Jason Miner at the time.
“Celanese does not believe there is an engineering materials/plastics deal in the market that it could not undertake,” Deutsche Bank analysts said after meeting with the company’s chief financial officer in November. The corporation has previously told investors that it had $6 billion in deal-making borrowing capacity.
Celanese relocated its worldwide headquarters from Frankfurt, Germany, to North Texas in 2005, a year after private equity firm Blackstone Group purchased the company. It dates back to 1918, when the American Cellulose & Chemical Manufacturing Co. was founded.
The company’s 8,529 workers operate across 35 global production locations and six connected plants, mostly in North America, Europe, and Asia.