2024-03-10 20:36:56 ET
Summary
- Celanese's acquisition of DuPont's Mobility and Materials division did not bring the expected returns due to a challenging market environment.
- The company is currently saddled with a large debt and depressed earnings, but management is taking actions to ensure profitability and service the debt.
- While management is taking the right actions, the current perspective does not outweigh short-term risks.
In an article called ‘the seed is planted, now watch returns grow’, the case was made Celanese (CE) would grow returns after the acquisition of DuPont’s (DD) Mobility and Materials (M&M) and division. Against the backdrop of a challenging market environment, this acquisition did not yet bring what many hoped for. Or, as Robbert Quillen aptly noted decades ago:
Good times are when people make debts to pay in bad times
The acquisition was supposed to add approximately US$0.9Bn in EBITDA (pre-synergy) to the bottom line and support free cash flow. Furthermore, ‘swift deleveraging with total debt below 3.0x EBITDA within two years of closing’ was foreseen, also see figure 1....
Read the full article on Seeking Alpha
For further details see:
Celanese: Appetite For Acquisitions Remains