Company News
October 8, 2024
UBE Corp Acquires Lanxess Prepolymers Business
LANXESS’ Urethane Systems business to sold to UBE Corporation
Specialty chemicals company LANXESS (Cologne, Germany) signed a contract on October 3, 2024 to sell its Urethane Systems business to Japanese UBE Corporation (Tokyo). The enterprise value amounts to €460 million with expected proceeds of around €500 million. With this transaction LANXESS exits the last remaining polymer business.
The Urethane Systems business comprises 5 manufacturing sites globally as well as application laboratories in the USA, Europe and China. UBE Corporation will take over all operations from LANXESS with a total of around 400 employees. The Urethane Systems business generated sales of around €250 million last twelve months June 2024.
LANXESS will use the proceeds to reduce its net debt. The leverage ratio (net debt / EBITDA pre) will likely be reduced by ~0.5x.
“The sale of Urethane Systems marks another milestone in our fast transformation into a pure-play specialty chemicals company, as we are divesting the last remaining polymer business in our portfolio. We are convinced that the Urethanes business will have significantly enhanced opportunities for growth and development under the umbrella of UBE,” says Matthias Zachert, Chairman of the Board of Management of LANXESS AG. ”At the same time, we are using the proceeds from the transaction to strengthen our balance sheet by further reducing our net debt.”
The transaction remains subject to the approval of the relevant authorities. LANXESS expects the transaction to close in the first half of 2025.
October 1, 2024
ADNOC to Acquire Covestro
Abu Dhabi’s ADNOC to buy German chemicals firm Covestro for $16 bln
By Ludwig Burger and Yousef Saba
October 1, 20249:44 AM EDTUpdated 5 hours ago
- Summary
- Companies
- ADNOC to pay 62 euros per Covestro share, take on 3 bln in debt
- To buy additional 1.2 bln euros worth of new shares in Covestro
- Covestro shares jump 3.7% to a three-year high
- Deal could fuel debate over foreign takeovers of German firms
BERLIN/DUBAI Oct 1 (Reuters) – Abu Dhabi’s ADNOC has struck a deal to buy German chemicals maker Covestro (1COV.DE)
, opens new tab for 14.7 billion euros ($16.3 billion), including debt, in the energy giant’s biggest ever acquisition.
The deal is one of the largest foreign takeovers by a Gulf state as countries in the region seek to reduce their dependence on oil amid the global switch to cleaner energy.
It also comes at a sensitive time in Germany for foreign acquisitions, as Commerzbank and the government seek to fend off interest in the bank from Italy’s UniCredit.
The 62 euros-per-share cash deal, which will also see ADNOC take on about 3 billion euros in debt, follows protracted negotiations and is a cornerstone of the energy giant’s drive to grow in petrochemicals along with gas and renewable energy.
ADNOC said that when the transaction closes it would also buy 1.17 billion euros worth of new shares in Covestro to improve funding at the former Bayer (BAYGn.DE)
, opens new tab unit.
“We believe that the fundamentals of chemicals are strong,” Khaled Salmeen, ADNOC head of downstream, marketing, and trading, told Reuters, adding he saw Covestro as a platform for growth.
“This sector, and specifically Covestro’s space in the sector, will grow higher than GDP from now to 2050,” he added.
Shares in Covestro, which makes plastics and chemicals for the automotive, construction, and engineering sectors, jumped 3.7% to a three-year high of 58 euros.
ADNOC has also been in talks with Austria’s OMV to merge their petrochemical joint ventures Borealis and Borouge. ADNOC took a 24.9% stake in OMV from Abu Dhabi sovereign fund Mubadala in February.
Covestro was created in 2015 after being spun off from Bayer. It opened its books to ADNOC in June – a year after ADNOC’s initial interest was reported.
The takeover offer will be subject to a minimum acceptance threshold of 50% plus one share of Covestro’s capital.
“The long negotiations have paid off – both for Covestro and for the shareholders. The deal is well structured and now has a good chance of coming to a successful conclusion,” said Arne Rautenberg, a fund manager at Union Investment, one of Covestro’s top-15 shareholders.
LIMITS TO CONTROL
The deal could stoke a debate in Germany about foreign takeovers of blue-chip companies amid a weak economy.
ADNOC, however, granted some autonomy to Covestro.
Covestro said that half of the seats on its supervisory board would continue to be held by labour representatives, as is the norm at German listed companies, and two members of the board’s shareholder representatives would be independent of ADNOC.
ADNOC pledged not to sell, close or significantly reduce Covestro’s business activities and to protect its technology and intellectual property, Covestro said.
The German company added its management board would stay in charge of management and strategic direction, and Covestro CEO Markus Steilemann told Reuters he planned to serve out his contract running until 2028.
“I believe this is the right step not only to keep Covestro on a growth path but also to move it to the fast lane,” Steilemann said of the deal.
Covestro reported a net loss of 72 million euros in the first six months of the year, versus a 46 million euro profit a year earlier.
The agreement highlights an increase in dealmaking between the Middle East and Europe as Gulf investors are drawn to company valuations that lag those in the United States, as well as an easier regulatory backdrop for buyers and a generally warmer welcome because of investment needs, advisers and analysts have told Reuters.
It is the Middle East’s second biggest acquisition after Israel’s Teva Pharmaceuticals’ purchase of Allergan’s generic drugs business for around $40 billion in 2015, according to Dealogic data.
The deal also follows several failed bids by Emirati companies to buy foreign targets.
Abu Dhabi utility TAQA’s $22 billion attempt to buy Spain’s Naturgy collapsed earlier this year, partly over disagreements on governance, people with direct knowledge of the talks said.
Britain also blocked an Abu Dhabi-backed group’s plan to buy the Telegraph newspaper, and only cleared Abu Dhabi state-controlled telecoms firm e&’s purchase of a 14.6% stake in Vodafone after ordering the UK company to take steps to manage national security risks that the government said the deal posed.
Covestro said its management board was advised by investment banks Goldman Sachs (GS.N), opens new tab and Perella Weinberg (PWP.O)
, opens new tab as well as by law firm Linklaters. Its supervisory board was advised by Rothschild & Co and Macquarie Capital as well as by law firm SZA Schilling, Zutt & Anschuetz.
ADNOC said Morgan Stanley (MS.N), opens new tab exclusively provided financial advice while Freshfields Bruckhaus Deringer was its legal adviser.
September 27, 2024
Monument Chemical Strike Has Ended
STRIKE ENDS: New Union Contract Reached For Approximately 120 Monument Chemical Workers
Berry Craig
03 Sep, 2024
32BJ SEIU Members ratified a contract that ensures better wages, job security, and safe working conditions
(Brandenburg, KY) – On Friday, 32BJ SEIU and representatives with Monument Chemical reached an agreement for a new contract. A weeklong strike of 120 Monument Chemical Workers ended this morning, after reaching a historic deal that protects workers’ jobs and safe working conditions while also raising their wages.
The three year contract includes:
- Historic wage increases of 9% over the course of the contract.
- Protection against workforce changes that would pull skilled workers from their primary functions.
- Protection of seniority benefits at the plant including workers’ schedules.
- Mediated labor management meetings so that workers can provide direct input on their working conditions.
- An increase in eligible holiday pay from 8 hours to 12 hours.
“I’m glad to see the members get back to work and get a fair contract, but we wish it didn’t have to get to this point,” said Kevin Duke, a Monument Chemical Shipper. “This deal means that the shifts and wage increases that many of us have worked decades to earn will remain intact.”
“Getting a fair deal done for our members was crucial to this community because they are such an enormous part of Meade County,” said Robert Smith, Kentucky State Director of 32BJ SEIU. “This agreement ensures that experienced workers will continue to handle these potentially dangerous chemicals, ensuring the plant’s safety. They are happy to get back to work with a contract that reflects the importance and excellence of what they do.”
“We are thankful to everyone who honked, brought food, and supported us throughout this difficult week,” said Larry Houglan, a Monument Chemical Operator. “We were able to negotiate something that was beneficial for both sides. This deal will help the company with retention and morale around the plant. When you have long time employees it shows it is somewhere worth working and growing at.”
The workers are vital to the safe and efficient operation of the plant and include Plant Operators, Polychem Specialists, Shippers, Lab Technicians, Wastewater Treatment workers, and others. They handle dangerous chemicals – such as carbide and ethylene oxide – maintain the boiler system, and manage wastewater, among other duties, ensuring compliance with environmental and safety standards. The workers will return to their duties Saturday.
https://ky.aflcio.org/news/strike-ends-new-union-contract-reached-approximately-120-monument
September 26, 2024
Former CVC Plant Acquired
Polyrheo USA Acquires Plant from Huntsman
Polyrheo USA iannounced the purchase of Huntsman’s Maple Shade, NJ chemical manufacturing plant.
09.09.24
Polyrheo USA announced the purchase of Huntsman’s Maple Shade, NJ, chemical manufacturing plant.
This facility was previously owned by CVC Thermoset and Emerald Performance Materials, before being acquired by Huntsman in February 2020. Polyrheo has begun the process of recommissioning this manufacturing plant. Start up timing will be consistent with the renewal of permits, etc.
Tony Thomas, President of Polyrheo USA, stated, “The Maple Shade site represents a logical next step towards our strategic goal of becoming a significant chemical manufacturer in the United States with a focus on chemicals used in the CASE market, especially resins. Maple Shade is our third chemical manufacturing plant in the United States. Others being in Philadelphia PA and Newell Polymers in West Virginia (former a Deltech resins plant). In addition to these, we have manufacturing plants in Canada and India. Combined these assets give Polyrheo a strong leadership position in CASE and resins chemistries.”
September 26, 2024
Steelcase Results
Steelcase results flat as big customer orders falter
By Larry Adams
September 24, 2024 | 3:32 pm CDT
Photo By Steelcase
GRAND RAPIDS, Mich. — Steelcase achieved flat revenue in the second quarter and reported that order growth in the Americas was primarily driven by government, education, and healthcare customers, while orders from large corporate customers declined compared to the prior year after several quarters of strong year-over-year growth.
“Our business continued to improve this quarter as our adjusted earnings grew 26% and we drove 3% order growth in the Americas,” said Sara Armbruster, president and CEO. “Our education business had especially strong results this quarter, which reflected the benefits of our strategy to diversify the customers and markets we serve. In the Americas, our strategy to lead the workplace transformation continued to gain traction as we have increased our market share over the past year based on available industry data through July. We expect order patterns from our largest corporate customers to return to growth in the second half of the year.”
The company, which ranks #4 on the FDMC 300 list, reported second quarter revenue of $855.8 million, net income of $63.1 million, or $0.53 per share, and adjusted earnings per share of $0.39. In the prior year, Steelcase reported revenue of $854.6 million, net income of $27.5 million, or $0.23 per share, and adjusted earnings per share of $0.31.
Revenue was approximately flat in the second quarter compared to the prior year, with a 1 percent increase in the Americas and a 4 percent decrease in International. On an organic basis, revenue grew 2 percent, with 3 percent growth in the Americas and a 4 percent decline in International. The Americas growth was driven by higher volume from large corporate, education, and government customers, while the International decline was primarily driven by continued weakness in China.
Operating income of $90.0 million in the second quarter represented an increase of $49.0 million compared to the prior year, driven by a $27.9 million benefit from a gain on the sale of land (net of related variable compensation expense), $5.7 million of lower restructuring costs, gross margin improvement in the Americas and lower operating expenses in International. The gain recorded during the quarter related to the sale of approximately 315 acres of unused land for net proceeds of $44.2 million. Adjusted operating income of $68.5 million in the second quarter represented an increase of $15.2 million compared to the prior year.
“The Americas delivered an 11% adjusted operating margin this quarter, driven by the seasonal strength of our education business and the continued progress of our profitability improvement initiatives,” said Dave Sylvester, senior vice president and CFO. “Our International segment drove $2.4 million of year-over-year improved adjusted operating results, despite the soft demand environment, and expects to be profitable in the third quarter.”
Gross margin of 34.5 percent in the second quarter represented an improvement of 130 basis points compared to the prior year driven by favorable business mix and benefits from operational performance and cost reduction initiatives.
Operating expenses of $205.1 million in the second quarter represented a decrease of $30.8 million compared to the prior year. The current year reflected a $42.1 million benefit from a gain on sale of land, a $4.3 million decrease from a divestiture, $3.7 million of lower spending and employee costs in International, $9.8 million of higher variable compensation expense (driven by the gain on the sale of land) and $2.2 million of higher information technology costs primarily related to the company’s business transformation initiative. The prior year reflected $5.1 million of gains related to the sale of an aircraft and other aviation assets.
Total liquidity, which is comprised of cash and cash equivalents, short-term investments, and the cash surrender value of company-owned life insurance, aggregated to $507.1 million at the end of the second quarter and represented an increase of $192.6 million compared to the prior year. Total debt was $446.7 million. Trailing four-quarter adjusted EBITDA of $285.3 million (or 9.1 percent of revenue) represented an increase of 16 percent compared to the prior year.
The Board of Directors has declared a quarterly cash dividend of $0.10 per share, to be paid on or before October 15, 2024, to shareholders of record as of September 30, 2024.
Outlook
At the end of the second quarter, the company’s backlog was approximately $680 million, which was approximately flat compared to the prior year and contained a higher percentage of orders expected to ship within ninety days compared to the prior year. The company expects third-quarter fiscal 2025 revenue to be in the range of $785 to $810 million. The company reported revenue of $777.9 million in the third quarter of fiscal 2024. The projected revenue range translates to growth of 1 to 4 percent compared to the prior year, or 1 to 5 percent on an organic basis.
The company expects to report earnings per share of between $0.18 to $0.22 for the third quarter of fiscal 2025 and adjusted earnings per share of between $0.21 to $0.25. The company reported earnings per share of $0.26 and had adjusted earnings per share of $0.29 in the third quarter of fiscal 2024 which benefited by approximately $0.09 related to the reversal of an accrued earnout liability and gains from the sale of fixed assets.
The third quarter estimates include:
- gross margin of approximately 32.5 to 33.0 percent,
- projected operating expenses of between $225 to $230 million, which includes $4.3 million of amortization of purchased intangible assets,
- projected interest expense, net of investment income and other income, net, of approximately $2 million, and
- projected effective tax rate of approximately 27 percent.
“Based on our results through the first half of the year and our third quarter outlook, we continue to have confidence of potentially achieving the higher end of the range of our fiscal 2025 target for adjusted earnings per share of between $0.85 to $1.00,” said Dave Sylvester.
“We are pleased with our results through the first half of fiscal 2025 in which our adjusted earnings per share increased by nearly 40% compared to the prior year,” said Armbruster. “We continue to focus on developing innovative solutions to help our customers transform their workplaces and diversify the customer and market segments we serve.”
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