DuPont has entered into a definitive agreement with Celanese Corp. to divest a majority of its Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Performance Resins and Advanced Solutions business lines for $11 billion in cash. The deal is subject to customary transaction adjustments in accordance with the definitive agreement, which represents an enterprise value multiple of ~14x 2021 operating EBITDA.
Combined, these businesses generated net sales of approximately $3.5 billion and operating EBITDA of approximately $0.8 billion in 2021. The cash tax rate on the sale to Celanese is expected to be in the mid to high-single digits.
Celanese has received fully committed financing in connection with the transaction. The transaction is expected to close around the end of 2022, subject to customary closing conditions and regulatory approvals.
“The transaction with Celanese that we are announcing today will create a market-leading portfolio serving the automotive, consumer and industrial markets with unmatched scale, manufacturing capability and technical expertise,” said Ed Breen, executive chairman and CEO of DuPont. “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. We are excited for Celanese to partner with the team and we are confident that together they will continue to drive industry-defining material science innovation to serve customers and the value chain.”
“We are excited to welcome our future colleagues from DuPont who have built a world-class product and technology portfolio which is highly regarded in the industry,” said Lori Ryerkerk, Celanese chairman and CEO. “Our businesses are highly complementary which will accelerate our growth in high-value applications including future mobility, connectivity and medical.”
“Today’s announcement represents a significant milestone in DuPont’s transformation as a premier multi-industrial company building upon our recent acquisition of Laird Performance Materials and our intended acquisition of Rogers Corp. to further define DuPont as a market leader in the areas of electronics, water, industrial technologies, protection and next generation automotive,” Breen continued. “This agreement also generates significant value for DuPont shareholders. After consideration of multiple deal structures, including a range of potential buyers, we are confident that our announced transaction with Celanese maximizes value for our shareholders and positions the business and our employees for long-term success.”
DuPont is separately advancing the process to divest its Delrin business, which was included in the scope of the strategic review process the company announced on Nov. 2, 2021. The Delrin business generated net sales of approximately $0.55 billion and operating EBITDA of approximately $0.18 billion in 2021. The company is targeting a closing date for the sale of Delrin in the first quarter 2023.
“Delrin acetal homopolymer (H-POM) is an industry leading technology utilized by customers around the world to meet their most demanding needs,” Breen said. “There is substantial interest in this high-quality asset and I am confident that the anticipated sale of Delrin will generate additional value for DuPont shareholders.”
The Auto Adhesives, Multibase and Tedlar product lines within the Mobility & Materials segment (the “retained M&M businesses”) are not included in the scope of the intended divestitures. Beginning in the first quarter 2022, DuPont will report the retained M&M businesses in Corporate for current and historical periods. In aggregate, the retained M&M businesses generated net sales of approximately $0.95 billion and operating EBITDA of approximately $0.12 billion in 2021.
A summary of the business lines that the company intends to divest and those that will be reported in Corporate is posted to DuPont Investor Relations webpage.
Beginning in the first quarter 2022, DuPont will classify and report results of the businesses to be sold to Celanese, as well as the Delrin business (the “divested M&M businesses”), as discontinued operations for the current and historical periods in DuPont’s consolidated financial statements. Prior to reporting its first quarter 2022 results, DuPont will update its first quarter and full year 2022 outlook to reflect the impact of classifying the divested M&M businesses as discontinued operations.
DuPont says it intends on using the net proceeds from the divested M&M businesses to fund the previously announced acquisition of Rogers Corp., and further M&A opportunities in addition to continuing share repurchases as part of a balanced financial policy.
Goldman Sachs & Co. LLC is serving as DuPont’s financial adviser and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.