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Celanese (CE) to Buy Exxon Mobil's Santoprene Business for $1.15B

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·4 min read
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Celanese Corporation CE inked a definitive agreement to acquire the Santoprene TPV elastomers business of Exxon Mobil Corporation. Under the deal, Celanese will purchase the industry-renowned Santoprene brand as part of a comprehensive TPV product portfolio. The purchase also includes intellectual property, production and commercial assets as well as a world-class organization.

The Santoprene business of Exxon Mobil is a leading global manufacturer of TPV with varied utilities in fields including automotive, construction, appliance, medical and industrial. The Santoprene portfolio is highly functionalized to specific application requirements and is backed by industry-leading intellectual property.

Per the terms of the agreement, the buyout is worth $1.15 billion on a cash-free and debt-free basis. Through this deal, Celanese will acquire Santoprene, Dytron, and Geolast trademarks and product portfolios, all customer and supplier contracts as well as agreements. It will also acquire two world-scale production sites in Pensacola, FL and Newport, Wales with over 190 kt of total annual production capacity.

The buyout also includes comprehensive TPV intellectual property portfolio with related technical and R&D assets as well as around 350 highly-skilled employees including world-class manufacturing, technical and commercial organizations.

Celanese expects the deal to be immediately accretive to 2022 adjusted earnings per share and free cash flow. The buyout is expected to be financed by excess cash and available liquidity on the company’s balance sheet. It is subject to regulatory approvals and projected to be complete in fourth-quarter 2021.

The acquisition further broadens the company’s portfolio of engineered solutions and enables it to offer a wider range of functionalized solutions to targeted growth areas including future mobility, medical and sustainability.

Shares of Celanese have surged 71.3% in the past year compared with 14.6% fall of the industry.

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Celanese, in its last earnings call, stated that demand for its Engineered Materials and Acetyl Chain products remains strong in most end markets. The company expects adjusted earnings for the second quarter of roughly $4.00 per share factoring in current industry dynamics, higher inventory costs from Uri, and minimal turnaround requirements. Moreover, Celanese expects adjusted earnings of $12.50-$13.50 per share for 2021.

Celanese Corporation Price and Consensus

Celanese Corporation Price and Consensus
Celanese Corporation Price and Consensus

Celanese Corporation price-consensus-chart | Celanese Corporation Quote

Zacks Rank & Key Picks

Celanese currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Nucor Corporation NUE, Olin Corporation OLN and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 344.9% for the current year. The company’s shares have surged 131.7% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has an expected earnings growth rate of around 506.7% for the current year. The company’s shares have skyrocketed 309.3% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have surged 53.8% in the past year. It currently flaunts a Zacks Rank #1.

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