Total's Bostik Adhesives Unit Gets $2.25 Bln Takeover Offer From Arkema - Update

(RTTNews) - French oil and gas giant Total SA (TTA.L, TTFNF.PK, TOT) Friday said that it has received an offer from its former specialty chemicals division Arkema (ARKAY.PK) to acquire its adhesives unit Bostik. Arkema's offer values Bostik at 1.74 billion euros or around $2.25 billion, representing 11 times the company's EBITDA.

Total said it has granted Arkema, which was spun-off from Total in 2006, an exclusivity period to pursue the offer, citing the quality of the project. The offer will be presented to the relevant employee representatives, as part of the required information and consultation procedures.

In a separate statement, Arkema said it expects the deal to be cash flow accretive from first full year and earnings per share accretive from second year. The company also raised its 2017 EBITDA target to 1.310 billion euros citing the proposed acquisition of Bostik and the contemplated divestment program. Arkema previously expected 2014 EBITDA should be close to 800 million euros.

The proposed transaction is subject to approval by the relevant antitrust authorities.

Total noted that Arkema's offer for Bostik includes clear undertakings to continue operations sustainably and safeguard existing jobs and employee benefits.

Bostik, a Total affiliate since 1990, employs 4,900 people through its 48 production facilities, mainly in Europe and North America. In France, the company has a workforce of 900 employees. In 2013, Bostik reported revenue of 1.5 billion euros.

Patrick Pouyanné, President of Total's Refining & Chemicals, said, "Joining France's leading chemicals company would give Bostik the resources it needs to pursue its industrial and commercial development while fulfilling its commitments to employees and partners."

Arkema said the deal would allow it to further strengthen its position in specialty chemicals and to continue developing its High Performance Materials segment, which would account for 42 percent of total sales following the acquisition of Bostik. Arkema would achieve proforma sales of some 7.6 billion euros while increasing its headcount to some 19,000 people. This project would also entail increasing the divestment program of non-core activities representing some 500 million euros additional sales.

According to Arkema, Bostik's current pace of development together with the synergies will help improve Bostik's EBITDA margin, with the long-term objective to achieve an EBITDA margin of 14 percent to 15 percent, in line with peers average.

Arkema said the project would be financed by a 350 million euros rights issue, the issuance of hybrid securities of between 600 million euros and 700 million euros, and a senior bond issuance for the balance, i.e. between 500 million euros and 600 million euros.

In Paris, Total shares were losing 0.11 percent to 49.94 euros, and Arkema shares were losing 0.03 percent to 57.80 euros.