Celanese buys DuPont units for $11B

In a major engineering resins deal, Celanese Corp. is acquiring a majority of DuPont Co.'s Mobility & Materials unit for $11 billion in cash.

The businesses being acquired have annual sales of about $3.5 billion. In a Feb. 18 news release, officials with DuPont in Wilmington, Del., said that the sale price represents an enterprise value multiple of around 14 times the unit's 2021 operating EBITDA.

The deal includes a major nylon resin business but doesn't include DuPont's Tedlar fluoropolymer, Multibase silicone additives or Delrin acetal businesses. Dallas-based Celanese ranks as the world's largest acetal maker.

The acquisition "is an important strategic step forward and establishes Celanese as the preeminent global specialty materials company," Celanese Chairman and CEO Lori Ryerkerk said in a Feb. 18 news release.

"For nearly a decade, we have implemented, enhanced, and increasingly extended the engineered materials [EM] commercial model to generate shareholder value," she added. The DuPont business "will be a high-quality addition to EM and will unlock significant opportunities to generate further customer and shareholder value."

Tom Kelly, Celanese EM senior vice president, added that the DuPont business "is a uniquely complementary specialty materials asset to EM, spanning product, geography and end-market" and that the acquisition "greatly enhances the EM product portfolio by adding new polymers, industry-renowned brands, leading product technology, and backward integration in critical polymers."

The deal includes 29 global manufacturing sites and an intellectual property portfolio of about 850 patents. The business being acquired employs around 5,000 in manufacturing, technical and commercial roles.

Brands and materials involved in the sale include Zytel nylon, Crastin polybutylene terephthalate (PBT), Rynite high-performance nylon and filaments and Vamac and Hytrel elastomers.

Industry consultant Robert Eller said in an email that the Celanese-Dupont deal “presents synergies resulting from the ability to bundle or offer a package that includes engineering thermoplastics and thermoplastic elastomers.”

“TPEs have been trying for years to benefit from ETP sector developments and market presence,” said Eller, president of Robert Eller Associates in Akron, Ohio. “There will be product development, sales/marketing, path-to-market, global scale, economies of scale and R&D synergies.

“The ability to combine rigid and flexible combinations, a trend in the marketplace, is an immediate/obvious benefit. The combination offers immediate path-to-market advantages for Celanese, especially in the very high growth EV automotive sector,” he said.

For example, Eller said, product designers working on projects that need both rigid and flexible components now would be able to develop “an integrated offering with associated benefits.”

Officials with DuPont in Wilmington, Del., previously said that locations involved in a potential sale included Zytel nylon sites in Richmond, Va.; Hamm, Germany; and Mechelen, Belgium; Vamac elastomer production in Orange, Texas; DuPont Teijin film sites in Hopewell, Va.; and Torrance, Calif.; and sites compounding several of these materials in Shenzhen and Zhangjiagang, China.

"We are proud of the strength of these industry-leading businesses, which we believe will be even stronger when combined with the highly complementary portfolio of Celanese," DuPont Executive Chairman and CEO Ed Breen said in a news release.

He added that the sale "represents a significant milestone in DuPont's transformation as a premier multi-industrial company … to further define DuPont as a market leader in the areas of electronics, water, industrial technologies, protection and next generation automotive."

DuPont will continue to seek a separate buyer for its Delrin acetal business, according to Breen. That business has annual sales of about $550 million. "There is substantial interest in this high-quality asset," Breen said.

Nylon is a major part of DuPont's history. The firm began commercial production of nylon 6/6 fiber in December 1939, at a newly built plant in Seaford, Del., about 90 miles from company headquarters in Wilmington. DuPont's work on developing nylon was led by Wallace Carothers, a legendary researcher who left the faculty of Harvard University to join DuPont in 1928.

Within the first four years following the close of the transaction, Celanese expects to achieve run-rate synergies of around $450 million as a result of the complementary fit of the businesses. It's also expected to add $4 or more to Celanese's per-share stock price by 2026.

Celanese's total sales for 2021 were up almost 51 percent to a little more than $8.5 billion, even as the firm's profit declined 5 percent to $1.9 billion. Celanese's Engineered Materials unit, including acetals, posted sales of $2.7 billion, up more than 28 percent, and adjusted earnings before interest and taxes of $571 million, up more than 41 percent.

A previous version of this story referred to a plant in Bayport, Texas, that would change hands. DuPont retains the facility in the deal.