AkzoNobel to sell chemicals business to Carlyle/GIC for EUR10.1 bn
Having fought off a takeover last year from rival firm PPG Industries, Netherlands-headquartered chemical firm AkzoNobel will sell 100% of its Specialty Chemicals business to US private equity firm Carlyle Group and Singapore’s sovereign wealth fund GIC for EUR10.1 billion, including debt.
The price offer is compared to the takeover offer of EUR26 billion last year by US compatriot PPG.
The division has sales of EUR5 billion a year and includes five business units that include chemical building blocks for chlorine to salt; pesticides to soaps.
AkzoNobel expects to receive a cash payment of EUR8.9 billion. Following deduction of deal and separation related costs, as well as other previously announced liabilities, the net proceeds are expected to be around EUR7.5 billion. The vast majority of net proceeds will be distributed to shareholders. Further details will be announced in due course.
This transaction creates two focused and high performing businesses – Paints and Coatings, and Specialty Chemicals – as part of its strategy announced in April 2017. The transaction is expected to be completed before the end of 2018. It also allows AkzoNobel to focus on its main paints and coatings business.
The Board of Management and the Supervisory Board concluded that a private sale to The Carlyle Group and GIC is in the best interests of AkzoNobel, Specialty Chemicals and its respective stakeholders, including employees, shareholders and customers. This is the outcome of a thorough dual-track process during which the Boards of AkzoNobel carefully considered both a legal demerger and a private sale.
Carlyle had been vying for the asset with US private equity firm Apollo and its consortium partner, Dutch fund PGGM, as well as Dutch investor Hal Investments, and Advent International partnered with Bain Capital Private Equity, according to Reuters.
Thierry Vanlancker, CEO AkzoNobel, said: “We believe the business is well positioned to capture growth opportunities and further improve performance. Carlyle has significant experience in the chemicals industry and a proven track record when it comes to health, safety, innovation and sustainability.”
The transaction is subject to customary closing conditions including the relevant regulatory approvals and consultation with the relevant employee representative bodies. AkzoNobel obtained shareholder approval for the separation at an Extraordinary General Meeting held on November 30, 2017.
Equity for this investment will come from Carlyle Partners VII, Carlyle Europe Partners IV, Carlyle’s longstanding investment partner GIC (which manages Singapore’s foreign reserves) and co-investors.