Celanese Privatization Hits Snag

In a development that will complicate the Blackstone Group’s attempt to make Celanese a private company, the investment firm is lowering the threshold needed to complete its $40-per-share tender offer and is extending the deadline by two weeks.
Blackstone failed to get shareholders to tender the requisite 85% of their outstanding shares by the March 15 deadline and is now lowering the bid to 75% of shares by March 29. German law says Blackstone cannot modify the deal further, putting the acquisition in a do-or-die position.

The deal—valued at $3.8 billion, including Celanese debt and retiree benefits—has so far won few takers. Only 41% of investors have agreed to the deal, including Kuwait Petroleum, which holds 29% of the company, and Celanese management, which owns roughly 4%.

However, retail and institutional investors own about 65% of the company. And when the bid was announced in December, some of these shareholders complained that it was too low.

Celanese, however, points to technical problems with the tender offer. A spokesman says many shareholders didn’t understand that they had to tender their shares by the March 15 deadline and instead thought they could offer up their shares in the subsequent two-week acceptance period. But that acceptance period could only go into effect if the original conditions of the deal—85% of shares tendered by March 15—were reached.

Celanese is optimistic now that the threshold is lower and the technical confusion is cleared up. “We are pretty confident,” the spokesman says. “It is more likely to go through now than it was before.”