Seismic Changes in Cellulosics: Part 2 - Tencel for Nonwovens (2004)

After CVC’s failure to acquire Lenzing and what appeared to be the closure of one too many of their viscose plants, they were clearly no longer likely to dominate the world’s rayon supply.  Acordis as a whole or in parts was put up for sale and whilst offers for the whole company were considered no deal was concluded.  Late last year, CVC created Corsadi, collecting the arguably more saleable parts[1] of the Acordis group within a financial structure more likely to encourage a sale.   Shortly afterwards it became apparent that Lenzing were interested; an article by the Austrian APA-OTS agency on 25/2/2004 apparently confirmed this, but neither company would comment.  Finally the Tencel-only deal was the talk of the IDEA04 nonwovens show in Miami, and the official press release emerged several days later on May 5^th.

So, here we are at the start of a new era in cellulosic fibres.  Let’s take stock.

Tencel by Lenzing

By acquiring Tencel, Lenzing add a nominal 80,000 tonnes of lyocell capacity to their 40,000 tonnes at Heiligenkreuz, to give 120,000 tonnes potential production from 3 plants on two continents.  With the original Tencel factory still in mothballs in Mobile, and with Lenzing’s second 20,000 tonne stream at Heiligenkreuz still ramping up, the actual fiber availability is probably 30,000 tonnes below the nominal, but this will change fast.  Acordis would have liked to re-open the original Tencel plant some time ago but had to await acquisition by a well-financed forward-looking fibre company.  This has now happened and it is difficult to see this capacity remaining idle for long, because like viscose, the lyocell business is booming due to the high demand

Seismic changes in man-made cellulosics: Part 1 - Lenzing takes Tencel (2004)

Here is Part 1 of the full text of an article from International Textiles Bulletin at the time of the Lenzing take over of Tencel. Points to note:

• Both CVC and Lenzing had expected the 2001 take-over of Lenzing to be allowed.
• Maybe to make the deal more palatable to the authorities, CVC closed their 2 best viscose operations (Mobile - Alabama and Grimbsy).
• The closures came at time when it was apparent that the viscose revival which had commenced in 1999 was real, and driven in part by demand for viscose in the new hydroentangled nonwoven wet-wipes.
• The Mobile viscose plant was a leading supplier of fibre for nonwovens and, strangely, was closed in order to keep what we thought was the less efficient and more polluting Lenzing Lowland plant open.  (More info needed here)

The long-rumoured acquisition of  Tencel from Acordis by Lenzing has at last been confirmed in a move that finally brings together the operations of the companies whose patents were pooled following an acrimonious battle over the rights to lyocell technology in the closing years of the last century.  Ever since Acordis’s major shareholder, CVC Partners tried – and failed - to capitalize on their acquisition of the old fibre businesses of Courtaulds and Akzo Nobel by adding Lenzing to the family, the industry has been waiting for this sort of rationalisation.

In October 2001 the European Commission prohibited the acquisition of Austria’s Lenzing by the UK’s CVC Partners Group Ltd, but only after plant closures apparently made in the anticipation of such a deal going through.  In April 2001, Acordis decided to close its Mobile viscose plant, one of the largest and lowest cost viscose fibre operations in the Western World, leaving the ageing Lenzing Lowland plant as the only source of viscose staple on the North American continent.   Acordis had earlier announced the  closure of Grimsby, the last viscose staple plant in the UK, and another remarkably efficient converter of wood cellulose into fibres.  Both Mobile and Grimsby specialised in low cost fibre for the world nonwoven market, leaving the Acordis Kelheim viscose plant, traditionally a textile fibre plant, as the only remaining Acordis source for the nonwovens industry.  

With the market for viscose in textiles declining in both Europe and America, some rationalization was inevitable, but to those observers expecting the nonwoven demand for viscose to rise on a wipe-fuelled boom, taking out the two key nonwoven plants seemed odd.  Lenzing’s Austrian plant had also specialised in textiles, and for many years Lenzing had been  a poor second to Courtaulds, and then Acordis in nonwoven market supply.  But the Acordis viscose closures left a vacuum into which Lenzing was sucked, along with Tencel and lyocell, and Birla.  Birla, India’s and the world’s biggest viscose producer realised that if they could change some of their enormous textile viscose capacity to supply European and American nonwoven requirements, they too had a rare opportunity to break into new and growing markets.

(Click here for Part 2..)

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.

EC Blocks CVC Takeover of Lenzing (2001)

The European Commission has blocked a proposed takeover of Lenzing AG by CVC Capital Partners, the private equity company that already controls Acordis, the other major European viscose producer.

After a four-month investigation, the Commission concluded that the deal would have created monopoly or dominant positions in several fiber sectors. The review was carried out in close co-operation with the Federal Trade Commission (FTC) in the US, where Lenzing and Acordis have viscose and lyocell capacity.

The Commission claimed that a merger of Lenzing and Acordis would have had a European market share in commodity viscose of over 55 percent and over 80 percent in spun-dyed viscose and viscose for tampons.

In the production and technology licensing of lyocell, the combination would have led to a worldwide monopoly, since they are the only two global manufacturers of the new cellulosic fiber, according to the Commission.

By eliminating Acordis' strongest competitor in viscose in Europe, the merger would have left only three smaller viscose producers: Sniace of Spain, Svenska Rayon of Sweden, and Saeteri of Finland.

The Commission dismissed as inadequate CVC's offer to issue non-exclusive licenses for tampon viscose and lyocell and to arrange the toll manufacturing of lyocell for a licensee.

Bank Austria, whose 80 percent stake in Lenzing was being acquired by CVC, now plans to place the shares in a holding company where it already has other industrial stakes ready for disposal.

Following the Commission's decision, Acordis has been reorganized so that its viscose staple and Tencel lyocell businesses will be combined in a single operation to be based at Kelheim, Germany.

"New products variants are about to be launched in the non-woven sector, and the prospect of being able to market Tencel and viscose alongside each other is extremely exciting," says Mark Lejman, currently CEO of Tencel. He will head the new operation.

22 October 2001 [Source: ICB Americas]

CVC buys 80% stake in Lenzing for Euro270m (2001)

LONDON (CNI)--CVC, the UK private equity company with a growing chemicals and fibres portfolio, said Thursday it is to buy Bank Austria's 80% stake in Austrian fibres maker Lenzing.

It plans to create a new company combining Lenzing with the cellulose-based activities of Acordis, the Dutch fibres manufacturer in which it has a 64% stake.

Bank Austria announced today it is to sell its 80% stake in Lenzing to CVC for Euro90/share in cash, or a total of Euro270m ($250m). The transaction, which will give the bank a Euro52m capital gain, is subject to regulatory approval.

The bank said the new Lenzing/Acordis combination will be the world's largest producer of cellulose fibres with sales of Euro1.4bn. CVC said it expects to expand the Lenzing production sites in Lenzing and Heiligenkreuz, Austria.

Acordis said the activities it will sell to the new company are: viscose staple, Tencel, viscose filament (Enka), acetate filament (Novaceta, a 50:50 joint venture with Italy's Snia), industrial rayon yarn (Cordenka) and the acrylic fibre operation in Kelheim, Germany. A company spokesman said these businesses generate revenues of about Euro800m - representing about 35-40% of the company's total sales - and about 4600 employees.

Following the sale of its cellulose-based activities, Acordis will continue to focus on its remaining industrial business units, which mainly comprise industrial fibres and the Colbond industrial non-wovens and geo textiles, the spokesman said. No financial details of this sale were disclosed.

The new company will be 54% owned by private equity funds advised by CVC. About 18% will be held by various Austrian co-investors, 18% will be held by Acordis and 10% will be held by the management of the new company.

Bank Austria revealed today that its Lenzing stake totals 80%, including its 50.1% industrial stake. A spokesman said the bank holds the remainder through its equity trading portfolio.

Anna Jagger: 15 February 2001 14:41 [Source: ICIS news]

(The EC later blocked this acquisition on the grounds that it would give Acordis a near-monopoly in EU viscose and lyocell fibres.  Later still it allowed Lenzing to acquire Tencel, apparently ignoring the same monopoly.  More to come...)