Public Private Partnership
The blackstone bid for celanese agCASE ANALYSISSubmitted to:Dr. AMIT BAGASubmitted by:P.Sai Krishna Vamsi School of ManagementBML Munjal UniversityGurgaon-India2017-18Q.1) Explain the LBO deal of Blackstone acquiring Celanese?A1) Blackstone, a private equity firm, saw significant opportunity in Celanese AG, a chemical manufacturing company, to expand through further downstream integration. Blackstone believed this would increase its Chemical Products segment margins, reduce earnings volatility, and increase its valuation multiple.
Blackstone, in LBO deal, analyzed the financial health of Celanese businesses, in addition to its large unfunded pension obligations along with M&A advisor Morgan Stanley). Blackstone Capital Partners has offered to acquire Celanese AG for 3.1 billion ($3.8 billion), including the assumption of 446 million in debt and 1 billion in pension, retiree medical and related liabilities. Blackstone put up $650 million in cash and borrowed the rest.Q.2) How many shares Celanese management hold post acquisition?Ans. Post- Acquisition Celanese will hold 15-16% shares in Celanese AG.Q.3) What amount of minimum pension funds the Blackstone has to pay in cash?Ans. The deal between Celanese and Blackstone was done at EUR 32.50 per share plus EUR 462.5 million cash contribution to the Celanese pension fund.Q.4) Calculate the IRR of the Blackstone when the exit?Ans. Blackstone made six times on its investment; $3.6 Billion on approx. $650million a 273% IRR in three year time frame! This was a very successful outcome.