After 56 years, Celanese Corp. has ended the Polyplastics joint venture by selling its share to partner Daicel Corp. for $1.58 billion in cash.
Celanese had owned a 45 percent stake in Polyplastics, which makes specialty plastics including acetal, polyphenylene sulfide (PPS) and liquid crystal polymer (LCP). The JV was founded in 1964. Dallas-based Celanese announced the deal with Tokyo-based Daicel on July 20.
Polyplastics operates two plants in China and plants in Japan, Malaysia and Taiwan. The business also operates two plants in Germany — one making specialty polymers and one making specialty chemicals. According to its website, Polyplastics has annual acetal production capacity of almost 700 million pounds.
In a news release, Celanese announced a $500 million increase to its share repurchase program.
"Celanese has been investing in and rapidly growing our base business in engineered materials globally over the last 10 years," Chairwoman and CEO Lori Ryerkerk said in the release. She added that Celanese "plans to use this opportunity to monetize a historically passive investment and allocate significant capital to higher growth businesses."
"At the conclusion of this joint venture relationship with Daicel, we extend our gratitude for their partnership and collaboration over the past 50-plus years in jointly bringing innovative products to customers and consumers worldwide."
Officials added that Celanese will continue to compete with Daicel in markets and regions where there are overlapping product lines. The Celanese engineered materials business "is well-positioned to continue its growth trajectory," Senior Vice President Tom Kelly said in the release.
He added that Celanese will continue to invest in product expansion to meet growing demand in 5G, advanced mobility, medical/pharmceutical, and sustainable materials. Celanese also plans to expand its manufacturing capacity in Asia to meet rapidly growing demand in the region, Kelly said.
Proceeds from the all-cash transaction will go toward "value-generating opportunities," including the increase in share repurchases, officials said. They added that Celanese expects to complete this transaction in the second half of this fiscal year. Until then, Polyplastics will continue to operate under its current JV ownership and management structure.
Celanese is the world's largest acetal maker and also produces a range of specialty plastics and chemicals. The firm employs 7,700 and posted sales of $6.3 billion in 2019.
Wall Street's reaction to the deal was mild, sending Celanese's per-share stock price up almost three percent to just under $91.80 on July 20. The price closed at $93.60 on July 21, down almost 23 percent so far this year as many firms have been battered by the COVID-19 pandemic.