Company News
August 28, 2023
3M/Aearo Earplugs Update
3M Shares Jump As Litigation Payout On Defective Military Earplugs Viewed Favorably By Analysts
by Tyler Durden
Monday, Aug 28, 2023 – 07:45 AM
3M shares gained in premarket trading in New York after Bloomberg reported the company “tentatively agreed” to pay $5.5 billion to settle the largest mass tort in US history, with 300,000 lawsuits by veterans that claim earplugs made for combat failed to protect them from hearing loss.
Under the discussed terms, people familiar with the settlement said 3M would pay $5.5 billion, resolving the massive lawsuit overhang, which is half of the $10 billion some Wall Street analysts predicted. Shares are up 6% because of this.
“Sounds like 3M negotiated a pretty good deal for itself, given this litigation has been weighing on them for the better part of a decade,” Carl Tobias, a University of Richmond law professor who teaches about product liability cases, told Bloomberg.
Bloomberg Intelligence projected the possibility that 3M would have had to pay out around $9.5 billion, whereas Barclays analysts estimated $8 billion.
Commentary from Wall Street analysts was favorable regarding the smaller settlement (list provided via Bloomberg):
Citi (Neutral, PT $111)
- The potential settlement is smaller than some investors expected, analyst Andrew Kaplowitz writes in a note; could mark another step in 3M alleviating its legal burden and moving away from litigation noise that has been weighing on the valuation and could be received favorably by investors
- Notes 3M still faces uncertainty regarding its per- and polyfluoroalkyl substances related exposure
RBC (Underperform, PT $100)
- News of any settlement is typically initially seen as good news, since it represents some tangible progress toward resolving what is still expected to be a long litigation road ahead for 3M along multiple fronts, writes analyst Deane Dray
- Positive stock reaction is due to a combination of slightly lower than expected settlement figure and a positive reaction associated with the potential alleviation of one of its two legal headwinds
Bloomberg Intelligence (No rating)
- Analysts including Joel Levington say, “3 M’s $5.5 billion agreement to resolve 300,000 lawsuits over military earplugs, as reported by Bloomberg News, may not stop the A2/A- rated company’s ratings from being downgraded further”
Bloomberg noted, “3 M’s board still must sign off on the deal.” And comes as the company faces thousands of other lawsuits over PFAS “forever chemicals.”
August 24, 2023
Does PE Have a Formula for Furniture?
Here’s how Art Van heirs, trustee settled bankruptcy lawsuit
Thomas Lester//Retail Editor//August 24, 2023
WILMINGTON, Del. — An $8 million settlement in federal bankruptcy court was reached on Aug. 23 between heirs of Art Van Elslander and trustee Alfred T. Giuliano, in relation to defunct retailer Art Van Furniture’s sale to private equity in 2017.
Under terms of the settlement, the majority of the settlement will be paid by National Union Fire Insurance Company. The agreement is not an admission by the parties of any of the allegations made, and the trustee released the defendants from all claims.
“Thanks to the parties for working through the issues. This obviously looks like a very sensible resolution,” Judge Craig Goldblatt of U.S. Bankruptcy Court in Delaware said last week when approving the settlement, according to The Detroit Free Press.
Gary Van Elslander, the son of Art Van Elslander, told The Free Press that the family is glad that the suit was settled, but it remains a painful final chapter for the family and employees of the former Warren, Mich.-based retailer.
“Who I feel really bad for is the employees of Art Van,” he told reporter J.C. Reindel. “My father always said that the heartbeat of the company was the people, and that was a fact — and they probably got hurt worse than anyone. The Van Elslander family, our feelings were hurt, my father’s legacy was hurt, but the pain that the employees felt was real, and that I think we probably feel worse about.”
Gary Van Elslander told The Free Press that, ultimately, the push for expansion and bringing in outside leadership helped doom the company.
“I think along the way that some of the culture of the business was lost,” he said. “We had a very driven culture, very hands-on among the executive team with our retail stores, and I think a lot of that was lost. There was management that was hired that was from outside the Detroit area. They really didn’t understand the legacy and the brand of Art Van Furniture as well as they could have, didn’t put enough importance on it.”
In the original complaint, filed March 7, 2022, Giuliano sought to recover more than $105 million in “fraudulent transfers” and more than $84.7 million in certain real properties, among recoveries.
The complaint alleged that Art Van’s sale to Thomas H. Lee Partners in 2017 for $620 million was a highly leveraged transaction, accomplished by stripping the value out of the debtors’ owned real properties and saddled the debtors with an unsustainable debt load for the benefit of the defendants and detriment of the debtors and their creditors.
It stated that prior to the acquisition, Art Van paid less than $23 million per year in total lease obligations and had $136.5 million in total future lease obligations. After a spate of sale/leaseback transactions, the debtors’ minimum lease obligations ballooned to $46 million per year and more than $877 million in total future operating lease obligations.
On March 8, 2020, Art Van filed for relief under Chapter 11 of Title 11 of the United States Code with the U.S. Bankruptcy Court for the District of Delaware. In April 2020, the Chapter 11 cases were converted to Chapter 7.
Just prior to beginning bankruptcy procedures, Art Van ranked No. 14 in Furniture Today’s 2020 Top 100 with $1.043 billion in sales across 192 stores in 2019.
“Eerily Simlar to Klaussner . . . “
August 21, 2023
Jiahua Announces Investment in Mexico
Jiahua announces a 20 Million USD expansion of North American operations
Jiahua announced today the expansion of their North American operations through the establishment of
our facility in Northern Mexico in Ramos Arizpe, Coahuila State. The new plant is owned by Jiahua’s US
subsidiary JCI Advanced Materials. The plant is set on 40,000 Sq meters of land with the initial factory
building being 5000 Sq meters. The plant is designed with 8 production trains that include mixing,
chemical reaction and storage of finished chemical products.
Jiahua is known as a leader in China in the area of Alkoxylation with 1.4 million metric tons of capacity in
6 different cities in China. This investment in North America is part of a globalization strategy being
employed currently by Jiahua. The main products of Jiahua are polyether polyols, amines and PCE’s
used in cement and admixtures, and surfactants used in a variety of applications.
Jiahua’s effort in the Americas has been underway for the last 4 years though it’s US subsidiary JCI
Advanced Technology. JCI has quickly established market share in the polyether polyol space through
development and implementation of a logistics and customer service network across the USA that
included shore tanks and a rail fleet. “As customer service is core to JCI’s value proposition, the
onshoring of the supply chain through the new plant in Mexico is just the next logical step in our growth
in the America’s” stated Timothy Earl Madden, CEO of Jiahua US Holdings and JCI Advanced Technology.
He added “while we focus on bringing up the Mexico plant by February 2024, we are also taking
additional steps that will further shore up our position in the Americas”.
About Jiahua: JIAHUA CHEMICALS INC. is a global chemical company based in Shanghai China. Jiahua is
dedicated to the research and development, production and sales of ethylene oxide and propylene
oxide downstream derivatives and other specialty chemicals. The company has set up five business
units: Construction Chemicals, Performance Materials, Care Chemicals, Coating and Industrial additives,
and Functional Materials. The products are widely used in construction, automobile, home furnishing,
coatings, oil fields, textile printing and dyeing, pesticides and other industries.
August 15, 2023
Bergonzi to Retire
Azelis Appoints Todd Cottrell to Succeed Frank Bergonzi as CEO of Azelis Americas
August 14, 2023 11:35 AM Eastern Daylight Time
ANTWERP, Belgium–(BUSINESS WIRE)–Regulatory News:
Azelis Group NV (“Azelis” or the “Company”) (Brussels:AZE), a leading global innovation service provider in the specialty chemicals and food ingredients industry, announces that Todd Cottrell will assume the role of CEO of Azelis Americas when Frank Bergonzi retires on September 30, 2023. To ensure a seamless transition, Frank will support Todd with onboarding into his new role, and subsequently will remain available as a consultant to contribute to Azelis’ growth strategy in the Americas through the end of 2025.
Todd brings more than 30 years of expertise and industry knowledge that span both technical and executive roles. He has worked for some of the global leaders in the CASE (coatings, adhesives, sealants and elastomers) industry, his last position having been Managing Director Americas for a large European manufacturer. Over his extensive career, Todd also served in regional director and regional president roles in France and China, as well as multiple industry board positions. Todd holds BSc in Chemical Engineering from Michigan Technological University and an MBA from Duke University, both in the USA.
As CEO of Azelis Americas, Todd will be responsible for driving growth through the development of principal partnerships, market expansion, both organic and inorganic, operational excellence within all market segments, and digital, innovation, and sustainability strategies that drive value for our principals and customers.
Frank, who has led Azelis in the Americas for over seven years, first as CEO & President of KODA Distribution, and afterward as CEO of Azelis Americas following the Group’s acquisition of KODA in 2015, has decided to retire after a 40-year career. During his tenure in Azelis, Frank has led the Americas region to record growth, both organically and through M&A. Azelis Americas has seen both new market segment additions as well as geographical expansion in this period. The business has become the leading innovation service provider for the specialty chemicals and food ingredients industry in the Americas, growing from $725 million in revenue at the end of 2015 to $1.7 billion in 2022. Seven acquisitions have been completed in the Americas since 2015, and the footprint has grown from the US and Canada to Latin America.
Dr. Hans Joachim Müller, Azelis Group CEO, comments:
“Under Frank’s leadership, we have more than doubled our revenue in the Americas and established a presence in five new countries spanning North and South America. I’d like to thank Frank for his tireless dedication and passionate leadership and wish him all the best in his retirement. Frank’s expertise will continue to remain highly valuable, as he continues to support the broader operations through the end of 2025.
At the same time, we welcome Todd, who brings a wealth of experience in specialty chemicals and in the CASE market in particular, which is our largest segment in the Americas. He has substantial specialty supplier experience and a good perspective on the role of the distribution channel. I am excited that he is taking the reins from Frank to lead our operations in the Americas.”
Frank Bergonzi, CEO and President, Azelis Americas, adds:
“Todd brings strong business acumen and CASE industry experience as well as passion, enthusiasm, and an entrepreneurial spirit that will continue to drive value for our principals and customers. With his experience as an Azelis principal and customer at different points in his career, Todd clearly understands the needs of all of our stakeholders and will bring that invaluable insight to Azelis. I look forward to supporting Todd throughout the transition and have every confidence in his ability to lead our talented team to further success.”
Todd Cottrell, incoming CEO, Azelis Americas, comments:
“I am honored to lead the next chapter of the Azelis growth journey in the Americas. Having been both a customer and principal of Azelis, I have first-hand experience with the commercial professionalism, formulation value, and market insights that the Azelis team brings to enable the success of its stakeholders. I’d like to sincerely thank Frank for building this foundation upon which we will continue to grow Azelis’ market presence and value creation throughout the Americas.”
August 14, 2023
Not to be Denied?
ADNOC Could Raise Covestro Bid To $12.6 Billion
By Alex Kimani – Aug 14, 2023, 3:30 PM CDT
Abu Dhabi National Oil Co (ADNOC) has signaled a willingness to raise its informal offer to 60 euros per share for a valuation of $12.6 billion for German plastics and chemicals maker Covestro. The latest offer would represent a premium of nearly 30% to Covestro’s closing share price on Friday.ADNOC last raised its informal offer to 57 euros per share in July, although no final decision has yet been made.
ADNOC appears willing to go on an M&A spree: Abu Dhabi’s national oil company is separately in talks with Austria’s OMV regarding a possible merger of the two companies that could form an entity worth $30 billion.
It’s not clear why ADNOC is interested in buying Covestro, considering how badly the petrochemical business has been doing lately. Earlier in August, Covestro reported a 21%Y/Y fall in second quarter revenues to 3.7 billion euros. Covestro is hardly alone, with U.S. oil and gas giants facing a similar fate. Sluggish consumer demand as well as a deluge of new factories coming online over the past few years means petrochemical margins face a protracted downturn. The situation is so dire that Cologne-based Lanxness AG has called it a “Lehman 2” moment for the chemicals industry.
“It’s been a pretty dramatic downturn. With chemicals oversupplied right now, large oil companies will find other areas to invest in,” Joseph Chang, a New York-based analyst at ICIS, has told Bloomberg.
Over the past decade, Big Oil has relied on petrochemicals as a growth engine, acting as a hedge when oil and gas prices drop and a long-term growth driver in the transition to clean energy. Previously, several Wall Street analysts predicted that oil demand will actually grow over the coming decades primarily driven by petrochemicals demand growth. Indeed, Energy Intelligence is not the only bull here. No less than 10 organizations, including OPEC, Exxon Mobil Corp. (NYSE:XOM), and the Energy Information Administration (EIA), have predicted that global oil demand will actually grow over the next few decades and not shrink as most analysts have forecast.
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