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Celanese Abandons Merger Deal with Blackstone's Rhodia Acetow

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Celanese Corporation (CE - Free Report) announced the abandoning of its previously declared merger deal with Blackstone’s Rhodia Acetow business. Both parties have withdrawn the notification of the proposed joint venture (JV) from the European Commission (EC) as the companies failed to reach an agreement on acceptable terms.

In June 2017, Celanese announced plans to combine its Cellulose Derivatives with Rhodia Acetow through a JV to create synergies through a global acetate tow supplier. The companies were granted competition approval without any divestitures in China, Mexico, Turkey and Russia. However, the EC required excessive divestitures, which undermines the benefits of the JV.

Celanese will review its strategic options, following the disappointing approach of the EC in this case. It will also continue to meet customer needs efficiently and provide the highest level of service and quality.

Shares of Celanese have dipped 0.7% in the past three months, outperforming the industry’s 3% decline.

Celanese, in its fourth-quarter earnings call, stated that moving forward it expects the Advanced Engineered Materials pipeline model to evolve to an increased level of project volume and the Acetyl Chain unit to sustain the momentum from its improved model. However, tow earnings is anticipated to remain relatively flat.

Zacks Rank & Key Picks

Celanese currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are LyondellBasell Industries N.V. (LYB - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Daqo New Energy Corp. (DQ - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have moved up 11.4% over the last six months.

CF Industries has an expected long-term earnings growth rate of 8%. Its shares have gained 4.8% over the last six months.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied 58.9% over the past six months.

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