Celanese to buy ExxonMobil’s Santoprene business

In a bid to diversify its engineering polymers business, Celanese has agreed to buy ExxonMobil’s Santoprene thermoplastic vulcanizates business for $1.15 billion.

Santoprene products, developed by Monsanto in the late 1970s, are vulcanized ethylene propylene diene monomer rubber encased in a polypropylene matrix. The result is elastomers that can be processed like thermoplastics. The unit has annual sales of about $500 million, two-thirds of which go into automotive applications. The balance of sales are for a host of industrial uses such as appliances, window seals, and medical devices.

The business generates about $100 million in before-tax earnings per year. It has 190,000 metric tons per year of production capacity at plants in Pensacola, Florida, and Newport, Wales, and employs about 350 people. Celanese expects to close the deal by the end of the year.

Celanese will fold the business into its engineered materials (EM) unit, where it will join high-end thermoplastics such as polyoxymethylene and ultra-high-molecular-weight polyethylene. Celanese acquired a modest thermoplastic elastomer operation in 2016 when it purchased the Italian compounder SO.F.TER.

“The Santoprene acquisition will contribute to the core of EM more meaningfully than any acquisition we have completed,” Celanese CEO Lori Ryerkerk said in a presentation to stock analysts. Ryerkerk worked for ExxonMobil for 24 years earlier in her career.

The transaction is also a way for Celanese to redeploy cash from the $1.6 billion sale of its stake in the Asian engineering polymer joint venture Polyplastics to partner Daicel last year. Ryerkerk said she intends to expand Santoprene production into Asia.

ExxonMobil says it is selling the business so it can focus on primary olefin derivatives, such as polyethylene, where it can take advantage of its vast scale.