Mergers & Acquisitions

September 10, 2023

Covestro to Discuss Negotiations With Adnoc

Covestro’s supervisory board to discuss negotiations with Adnoc

Today at 14:45

LEVERKUSEN (dpa-AFX) – The supervisory board of plastics group Covestro plans to discuss the start of formal negotiations with prospective buyer Abu Dhabi National Oil Co (Adnoc) this week, according to a report. The news agency Bloomberg reported this on Friday, citing people familiar with the matter. According to the report, the oil company had most recently offered 60 euros per Covestro share, which would give the DAX-listed group a valuation of 11.6 billion euros. Neither Adnoc nor Covestro would comment on the matter when asked by Bloomberg. Covestro is said to have rejected earlier informal offers of 55 euros and 57 euros per share as too low.

On the stock exchange, the news provided a boost: Covestro’s shares shot up by almost ten percent in the afternoon. At last count, the share price was around 52.48 euros, the highest since the outbreak of the Ukraine war.

As Bloomberg further reports, Adnoc is beckoning with investments in the group. According to the report, the oil company could secure a cash injection of $8 billion (7.5 billion euros) if a deal goes through. That would help win over both management and representatives of the workforce.

Adnoc has been expanding its involvement around the chemicals business for some time. The group claims almost all the oil for the United Arab Emirates. It has investment plans of $150 billion to expand its natural gas, chemicals and clean energy businesses worldwide./jcf/nas

https://uk.marketscreener.com/quote/stock/COVESTRO-AG-24239914/news/Circles-Covestro-s-supervisory-board-to-discuss-negotiations-with-Adnoc-44804021/

August 24, 2023

Does PE Have a Formula for Furniture?

art van legal issues

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 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 OPECExxon 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.

https://oilprice.com/Latest-Energy-News/World-News/ADNOC-Could-Raise-Covestro-Bid-To-126-Billion.html

August 3, 2023

Foamation Has Been Sold

Green Bay Packers Acquires Foamation, Maker of PU foam Cheesehead Hats

The Green Bay Packers announced today the organization has acquired Foamation Inc., the company responsible for creating the original Cheesehead® hat, along with a wide variety of specialty foam products.

Foamation, based in Milwaukee, was founded by Ralph Bruno in 1987. Bruno first wore the Cheesehead hat to a Brewers game, after having the idea for the unique headwear while reupholstering his mother’s couch and seeking an opportunity to poke fun at the sports fans south of Wisconsin. He burned holes in the foam to give it a Swiss cheese-like appearance and painted it yellow to look like cheddar.

The one-of-a-kind hat turned out to be big hit while Bruno was tailgating before the game, and a new tradition began; the Cheesehead has since become a universally recognized symbol for Wisconsinites and Packers fans.

After more than 30 years of growing Foamation, which offered the hats and a variety of other specialty cheese-like foam products, the Brunos were ready to shift gears. Since the Packers were already the largest purchaser of their products – in order to keep them stocked in the Packers Pro Shop – the couple approached the team to determine the next steps for Foamation.

With an already beloved, iconic brand like the Cheesehead, the Packers were excited about the opportunity to continue growing the brand.

“The popular Cheesehead hats have come to represent Packers fans all over the world and we’re excited to officially welcome this special brand to the Packers organization,” said Packers vice president of marketing and fan engagement Gabrielle Dow. “We’re looking forward to building upon the legacy the Bruno family has created over the years and offering our fans even more Cheesehead items to love.”

The Packers have sold Foamation’s products in the Packers Pro Shop for several years. All Cheesehead hats and related foam products will continue to be manufactured in Wisconsin.

“After many years of working with family and friends to build the Cheesehead brand, we are pleased to pass it on to the Green Bay Packers,” said Ralph Bruno. “We have had a very special relationship with the Packers over the years, and my wife, Sue, and I are both very excited about what the Packers can do with the Cheesehead going forward.”

A variety of Cheesehead products are currently available in the Packers Pro Shop in-store and online at packersproshop.com, and the team is exploring several opportunities to grow the brand and create new products for fans to enjoy this coming season.

https://www.bizjournals.com/milwaukee/news/2023/07/24/green-bay-packers-acquire-cheesehead-maker.html

August 1, 2023

MDI Restructuring in China

BASF, Huntsman, and Chinese partners agree to petrochemical deal in China

BASF, Huntsman, and Chinese partners agree to petrochemical deal in China

MOSCOW (MRC) — BASF and Huntsman together with their Chinese partner companies – Shanghai Hua Yi (Group Company), Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. and Shanghai Chlor-Alkali Chemical Co., Ltd. – announce the planned separation of their joint MDI (diphenylmethane diisocyanate) production at Shanghai Lianheng Isocyanate Co., Ltd. (SLIC), said Hydrocarbonprocessing.

Going forward, the companies will operate the two MDI plants located at the site in Caojing, China independently. Huntsman together with Shanghai Chlor-Alkali Chemical Co., Ltd, and BASF together with Shanghai Hua Yi (Group Company) and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd will each take over one of the MDI plants.

“The SLIC joint venture has been an important partnership to establish MDI production in China as one of the pioneers at the Shanghai Chemical Park,” said Ramkumar Dhruva, President Monomers division at BASF. “The new organizational setup will allow BASF and our partners Shanghai Hua Yi and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. to further develop our MDI operations in Shanghai while serving the demand of our customers in the region even more effectively.”

“Through the production of crude MDI in the SLIC joint venture over almost 20 years, Huntsman together with its partner, Shanghai Chlor-Alkali Chemical Co., Ltd, has been able to successfully build its polyurethanes business in China. As we move to integrate these assets into our downstream operations, we will be even better positioned to meet the future innovation and growth needs of our customers,” said Tony Hankins, President of Huntsman Polyurethanes.

Huntsman, together with Shanghai Chlor-Alkali Chemical Co., Ltd, will own and operate the original MDI plant that started commercial production in 2006, along with a hydrogen chloride recycling unit for the production of chlorine, a precursor for MDI, that was added in 2018. BASF will own and operate the MDI plant that was added in 2018, including the manufacturing facilities for the precursors aniline and nitrobenzene. All employees currently employed in the Joint Venture will be transferred to the respective organizations.

The new operational setup is in preparation and is expected to become effective during the fourth quarter of 2023, and is subject to pending regulatory authority approvals, permits and other customary closing conditions.

In addition to the plant in Caojing, BASF operates MDI production sites in Chongqing, China as well as in Yeosu, South Korea; Antwerp, Belgium; and Geismar, Louisiana. Following the restructuring of the joint venture, BASF’s global production capacity for MDI will total around 1.9 million tons.

Huntsman operates world-scale MDI production and splitting facilities in Rotterdam, the Netherlands, and Geismar, Louisiana, in addition to its Caojing facilities.

MDI is an important precursor in the manufacture of polyurethanes – versatile polymers that are used in the automotive and construction industries, in appliances such as refrigerators, and in footwear.

We remind, BASF and Zhejiang Guanghua Technology Co.,Ltd. (KHUA) have signed a Letter of Intent (LoI) for the supply of Neopentyl Glycol (NPG) from BASF’s Zhanjiang Verbund site to KHUA. This agreement marks a significant milestone in the long-term partnership between both parties. KHUA, a reputed manufacturer of saturated polyester resins for the powder coatings industry in China, is planning to build a 100 kilotons per annum (KT/a) production plant for high-end powder coatings resins in Donghai Island, Zhanjiang Economic & Technological Development Zone, where BASF is building a world-scale NPG plant with an annual production capacity of 80,000 metric tons.

https://www.mrchub.com/news/408720-basf-huntsman-and-chinese-partners-agree-to-petrochemical-deal-in-china