Europe Looks into Celanese's Acetex

MERGERS AND ACQUISITIONS

The European Commission is opening an in-depth review of Celanese's planned $492 million purchase, announced last October, of fellow acetyl chemicals maker Acetex.

The EC says it has not prejudged the final result of its review, due out in another four months. But commissioners are concerned that the acquisition may undermine competition because it would combine major European suppliers of acetic acid, vinyl acetate, and acetic anhydride.

"This takeover is in a sector that is currently undergoing substantial development in terms of both consolidation and shifting patterns of supply and demand," said European Competition Commissioner Neelie Kroes in a statement.

Acetex, which is based in Canada but derives more than 85% of its revenues from Europe, is not commenting on the review. Celanese says it believes it has "a compelling business rationale for the transaction and is cooperating fully." Celanese also reminds shareholders that it hasn';t included results from Acetex in its 2005 earnings guidance.

Celanese and Acetex have 38% and 17% shares of vinyl acetate capacity in Europe, respectively, according to the consulting group SRI International. Celanese also makes vinyl acetate for Acetex under a tolling arrangement.

Acetex has a 29% share of acetic acid capacity in Europe, according to SRI. Celanese closed two acetic acid plants in 2000 and no longer makes acetic acid in Europe. Acetex is building a $1 billion acetic acid and vinyl acetate joint venture in Saudi Arabia, scheduled for completion in 2007. Acetex has a 6.5% share of acetic anhydride capacity in Europe, SRI adds.