Celanese Sheds Industrial Specialty

The Dallas-based chemical giant Celanese Corp. (CE) recently completed the sale of its polyvinyl alcohol (PVOH) business to Japanese peers Sekisui Chemical Co. The company sold the business for $173 million following an agreement signed in April.

The PVOH business, a part of Celanese's Industrial Specialties segment, produces and sells a broad portfolio of performance chemicals engineered to meet specific customer requirements. The PVOH products are used in paints and coatings, adhesives, building and construction, glass fiber, textiles and paper.

The sale of the PVOH business includes its facilities in Calvert City, Kentucky, Pasadena, Texas, one unit within the complex at Tarragona, Spain, and resources from Celanese's Houston Technology Center. As many as 250 employees located at these operations will be transferred to Sekisui. There will also be long-term supply agreements between both the companies.

The downturn in the global economy and lower demand forced Celanese to reduce its capacities. This is expected to continue through the rest of 2009.

In the first quarter of 2009, Celanese reported a net loss from continuing operations of $20 million or $0.17 per diluted share. Net sales for the quarter declined 38% to $1.15 billion, driven by lower volumes on continued weak global demand and lower pricing for acetyl products.

In light of the above conditions, we continue to recommend CE as Sell with a target price of $16.00.

Read the full analyst report on CE