Tuesday, February 5, 2013

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.

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