Strategy

Total Sells Chemical Unit to Carlyle for $3.2B

The French energy group is seeking to shed $10 billion in assets by the end of 2017 as it responds to low oil prices.
Matthew HellerOctober 7, 2016
Total Sells Chemical Unit to Carlyle for $3.2B

French energy group Total SA said Friday it has agreed to sell its Atotech specialty chemicals business to the Carlyle Group for $3.2 billion, shedding another noncore asset in response to the oil price slump.

The deal brings the value of Total’s divestitures to $8.6 billion since the start of 2015 — more than 80% of the $10 billion target set for the end of next year. Atotech, which is based in Berlin, makes chemicals for circuit boards and semiconductors used in electronics.

Equity for the transaction will come from Carlyle Europe Partners IV, a $4.2 billion euro buyout fund, and Carlyle Partners VI, a $14.5 billion U.S. buyout fund.

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“With its intense customer focus and state-of-the-art R&D capabilities, Atotech is poised for continued growth and innovation,” Gregor Boehm, managing director of Carlyle Europe Partners, said in a news release. “We look forward to partnering with the company’s management team and employees to fully realize Atotech’s potential.”

According to The Financial Times, the private-equity giant faced competition in the bidding process from CVC Capital Partners and a consortium of BC Partners and Cinven. The $3.2 billion sale price for Atotech — 11.9 times 2015 EBITDA — was in line with expectations.

Total has countered the energy-price collapse by increasing oil and gas production, while also cutting operating costs and capital investment, and selling assets to raise cash.

“Other energy producers have taken the same course in dealing with an oil barrel worth less than half what it was 2½ years ago, but Total has been more successful than most of its peers,” The Wall Street Journal said, noting that the French company has continued to post billion-dollar annual profits.

Other Total assets up for sale include parts of its North Sea oil and gas portfolio but the FT said weak oil prices “have made upstream exploration and production businesses hard to offload as potential buyers seek fire-sale prices while sellers hold out for a so-far elusive recovery.”

In February 2015, Total sold its Bostik adhesive manufacturing business to Arkema for 1.74 billion euros.