Acordis plans disposals following EC ruling (2001)

LONDON (CNI)--Dutch-based synthetic fibres business Acordis confirmed on Wednesday that it plans to dispose of the four business divisions which would have been merged with Austrian fibre maker Lenzing had the merger not been blocked by the European Commission (EC).

Earlier today the EC told Acordis owner CVC Capital Partners that it could not approve the deal on the grounds that it would have created a dominant position in a number of fibres markets, especially viscose and lyocell staple fibres and technology.

All three players in the blocked takeover expressed their dismay at the EC's decision.

A spokesperson for UK-based private equity capital company CVC said: "This would have been the perfect relationship and we're disappointed. We have concerns that these companies' market share in Europe is at risk from Southeast Asian imports."

The company added in a statement: "The synergies resulting from the planned transaction would have significantly improved both the competitive position of the merged company and its customers."

Acordis reacted by saying it still intends to dispose of the four divisions which would have become part of ‘NewCo’, a separate company to have been formed following the merger. It confirmed that plans to establish 'NewCo' had been dropped.

'NewCo' would have combined the Lenzing business with Acordis' cellulosic fibres unit Tencel, its viscose staple fibres operation based in Kelheim, Germany, the Enka viscose filament business and industrial rayon yarn maker Cordenka.

Acordis said today that Tencel and its viscose staple fibres operations will be combined immediately under Tencel's existing chief executive Mark Lejman.
Enka and Cordenka will be combined by the end of 2001 and in the long term will be sold.

An Acordis spokesman said: "It's not surprising we're disappointed. You don't start such a negotiation unless you believe there's a very good chance of success."

Lenzing declared: "We regret the decision taken by the European Union (EU). However, this does not provide us with any problems, not even in the long run."

It added, however, that demand for fibres is cooling off this year. "At present, there are no prospects of a cyclical upswing regarding the worldwide economic situation. As a result, the fibre industry faces difficult overall conditions."

Lenzing said results for the full year will again be very good. However, it cautioned that they would be below the record level achieved in 2000.

17 October 2001 18:24 [Source: ICIS news]