Hoechst Group Makes Its Anticipated Life Sciences/Chemicals Split
It's official: like Monsanto a year ago, another major chemical name is going to spin off much of its chemicals business to concentrate on the life sciences. Hoechst (Frankfurt, Germany) had been hinting at this for most of the past year. In a statement issued on Nov. 17, it says that "as part of its efforts to focus the Hoechst Group on life sciences, Hoechst AG plans to combine most of its industrial chemicals businesses, particularly Celanese and Ticona, in an independent joint stock company which it will subsequently spin off to shareholders. Following the spin-off, there will be two separate publicly traded joint stock companies: Hoechst AG, with its focus on life sciences, and the newly formed Celanese AG, which will include the chemical activities currently run by Celanese and Ticona, as well as some other industrial and service businesses." The new company will be headquartered in Frankfurt, Germany.
"The planned spin-off is the most direct, fastest and most favorable way to achieve our goal of transforming Hoechst into a leading life sciences company. We expect it to open up new growth prospects for the industrial businesses," said CEO Jürgen Dormann. "We have therefore decided on an innovative transaction, one not yet carried out on this scale in Germany: a spin-off of the industrial chemicals activities."
Hoechst focuses resources on life sciences
After the transaction is completed, which is expected to be in spring 1999, Hoechst will mainly comprise the pharmaceutical company Hoechst Marion Roussel, the crop production and crop protection company Hoechst Schering AgrEvo, and the animal health company Hoechst Roussel Vet. In addition, Hoechst AG will continue to participate in a number of joint ventures and hold various equity investments. These include the life sciences activities Dade Behring diagnostics (Hoechst share 32.5%), Centeon plasma products (Hoechst share 50%) and Nutrinova food ingredients (Hoechst share 100%). Initially, Hoechst AG will retain its shareholdings in industrial businesses such as Clariant (Hoechst share 45%), Dyneon (Hoechst share 46%), DyStar (Hoechst share 50%), Messer (Hoechst share 66.66%), Targor (Hoechst share 50%), Trespaphan (Hoechst share 100%) and Wacker (Hoechst share 50%). Hoechst AG will divest these holdings when it is possible to realize the appropriate value for shareholders.
Celanese AG to focus on industrial chemicals
Celanese AG combines the companies Celanese and Ticona. Its core businesses will be:
- Acetyl chain products, including the acetyl value-added chain from methanol and acetic acid to cellulose acetate. Among other applications, these products are used in the production of paints, plastics, textiles and adhesives
- Chemical Intermediates, such as acrylic acid, acrylates, oxo products, amines and catalysts. Chemical Intermediates are used by a broad range of customers in the manufacture of both industrial and consumer products
- Ticona, one of the world's leading producers of technical polymers.
In addition, Celanese AG will hold a number of investments, such as Celgard (separation products), Thermphos, (phosphorous and phosphorous derivatives), Vinnolit, the PVC joint venture with Wacker and InfraServ Verwaltungs GmbH. It will also hold shares in various InfraServ companies and in a number of other service companies such as HPI (procurement). With 1997 sales of approximately DM 9.6 billion and about 15,000 employees, the 'new' Celanese Group will be a leading industrial chemicals company.
Claudio Sonder: Celanese AG portfolio tailor-made to meet global market demands
"The spin-off will create an independent company which is a global leader, both in terms of its key products and its production technology. The Celanese AG portfolio is tailor-made to meet global market demands," said Claudio Sonder, member of the Board of Management of Hoechst AG and CEO designate of Celanese AG. "Innovation, the efficient allocation of resources, and a corporate strategy which focuses on growth in selected areas, will be the hallmarks of the new company."
Extraordinary General Meeting scheduled for January 22, 1999
The spin-off requires approval by the supervisory board and 75% of the capital represented at an Extraordinary General Meeting of Hoechst AG, scheduled for Jan. 22, 1999. Subject to the approval, the legal execution of the spin-off will take place with its entry into the Commercial Register, expected at the end of Mar. 1999. For accounting and tax purposes, the merger will have retroactive effects as of Nov. 1, 1998. There will be no change in the subscribed capital and additional paid-in capital of Hoechst AG. Hoechst shareholders will retain their Hoechst shares and will receive one Celanese share for every ten Hoechst shares they own. No profits will be realized because the spin-off will be effected at book values in the financial statement of Hoechst AG.
Application will be made to list the new Celanese AG shares in Frankfurt and on the New York Stock Exchange. Hoechst AG shares will continue to be traded in Frankfurt, New York and a further 15 stock exchanges. Management expects Hoechst shares to remain in the DAX 30 index and Celanese shares to be admitted to the M-DAX following the next index review.
Celanese Locations in North America:
- Bay City, TX
- Bayport, TX
- Bishop, TX
- Bucks, AL
- Cangrejera, Mexico
- Celaya, Mexico
- Charlotte, NC
- Clear Lake, TX
- Cosoleacaque, Mexico
- Corpus Christi, TX
- Dallas, TX
- Drummondville, QE
- Edmonton, AB
- Pampa, TX
- Lerma, Mexico
- Montreal, QE
- Narrows, VA (Celco)
- Ocotlan, Mexico
- Portsmouth, VA
- Rock Hill, SC
- Toluca, Mexico