AkzoNobel has announced the full sale of its Specialty Chemicals business to the Carlyle Group and GIC for an enterprise value of €10.1 billion ($16.3 billion). The transaction creates two focused and high performing businesses – Paints and Coatings, and Specialty Chemicals – as part of Akzo’s strategy announced in April 2017. The transaction is expected to be completed before the end of 2018.
The AkzoNobel Board of Management and the Supervisory Board concluded that a private sale to Carlyle and GIC is in the best interests of AkzoNobel, Specialty Chemicals and its respective stakeholders, including employees, shareholders and customers. The company said it 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.
According to Akzo, Carlyle has a global presence and the financial capacity to enable the Specialty Chemicals business achieve its full potential, with extensive experience investing in chemicals, unlocking long-term potential and creating value in its portfolio companies.
“Today is a key milestone in creating two focused, high performing businesses to generate value for all stakeholders, said Thierry Vanlancker, CEO of AkzoNobel. “We delivered on our commitment to separate the Specialty Chemicals business and did so ahead of schedule.
“We are very pleased to announce the sale of Specialty Chemicals to the Carlyle Group and GIC. 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.”
“We are pleased to invest in the Specialty Chemicals business and proud to support a business with such a strong heritage,” added Martin Sumner and Zeina Bain, Managing Directors at the Carlyle Group. “We are committed to growing the business and building upon its innovation capability, high quality work force and asset base, as well as its world-class sustainability and environmental practices. We look forward to working with the management team to transition the business to a successful independent company.”
“Specialty Chemicals is a strong and profitable business with highly skilled and motivated employees serving our customers every day with essential chemistry,” said Werner Fuhrmann, CEO of AkzoNobel Specialty Chemicals. “As a focused chemicals company, we will concentrate our efforts and resources to accelerate profitable growth.
“With this transaction, our business has an opportunity to achieve its full potential and we will continue to fulfil the current and future needs of our customers throughout the world.”
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 30 November, 2017.
On the basis of the year-end balance sheet, AkzoNobel expects to receive a cash payment of €8.9 billion ($14.4 billion). Following deduction of deal and separation related costs, as well as other previously announced liabilities, the net proceeds are expected to be around €7.5 billion ($12.1 billion). The majority of net proceeds will be distributed to shareholders, with further details to be announced at a later date.
Equity will be provided by Carlyle Partners VII, Carlyle Europe Partners IV, Carlyle’s longstanding investment partner GIC (which manages Singapore’s foreign reserves) and co-investors.
The Carlyle Group previously acquired Axalta Coating Systems in 2013 for US$1.35 billion, locking in a US$4.5 billion profit on the investment when it broke up its stake and sold it to several investors over 2015 and 2016. The Group made an annual 80 per cent return on its investment over the four years of ownership.