Chemical and specialty materials company Celanese Corporation (NYSE: CE) recently revealed that it has entered into a definitive agreement to acquire DuPont Mobility & Materials business for $11 billion in cash. The deal is expected to close towards the end of 2022.
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Following the news, shares of the company slipped over 5% to close at $144.25 on Friday, but this can be attributed to wider market concerns.
Strategic Impact
With this acquisition, Celanese will gain access to DuPont’s global production network of 29 facilities and about 850 patents with associated technical and R&D assets.
Further, the company forecasts the buyout to achieve synergies to the tune of roughly $450 million within the first four years. Also, it expects to be immediately accretive to adjusted earnings per share with anticipated accretion of $4 or more per share once full synergies are achieved by 2026.
Management Commentary
The CEO of Celanese, Lori Ryerkerk, said, “The acquisition of the M&M business is an important strategic step forward and establishes Celanese as the preeminent global specialty materials company. For nearly a decade, we have implemented, enhanced, and increasingly extended the Engineered Materials (“EM”) commercial model to generate shareholder value.”
Stock Rating
Recently, Piper Sandler analyst Charles Neivert downgraded the stock from Buy to Hold with a price target of $180, which implies upside potential of 24.8% from current levels.
According to the analyst, supply chain issues will hinder earnings growth for the company.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 10 Buys and 7 Holds. The average Celanese price target of $191.69 implies that the stock has upside potential of 32.9% from current levels. Shares have gained 4.9% over the past year.
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