Arkema SA Proposed Acquisition of Bostik Corporate Call
Sep 19, 2014 AM CEST
FP.PA - Total SA
Arkema SA Proposed Acquisition of Bostik Corporate Call
Sep 19, 2014 / 08:00AM GMT
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Corporate Participants
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* Thierry Le Henaff
Arkema SA - Chairman & CEO
* Thierry Lemonnier
Arkema SA - CFO
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Conference Call Participants
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* James Knight
Exane BNP Paribas - Analyst
* Martin Roediger
Kepler Cheuvreux - Analyst
* Jaideep Pandya
Berenberg - Analyst
* Laurent Favre
BofA Merrill Lynch - Analyst
* Geoffrey Haire
HSBC - Analyst
* Andreas Heine
Barclays - Analyst
* Carolyn Bruger
Credit Agricole - Analyst
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Presentation
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Operator [1]
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Ladies and gentlemen, welcome to the Arkema conference call concerning the proposed acquisition of Bostik.
I now hand over to Mr. Thierry Le Henaff, CEO. Sir, please go ahead.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [2]
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Thank you. Good morning, everyone. Thank you for joining us to participate to this call, and thank you also for such short notice.
We have organized this conference call as we have just announced earlier this morning, as you could see, a project to acquire Bostik, the number three worldwide in adhesives.
This operation will be a new major milestone in our strategy, and also another significant step forward in building a leader in specialty chemicals. So we thought it would be very important to present you this project and to answer all the questions you may have on this transaction.
I am, together with Thierry Lemonnier, our CFO; Sophie Fouillat, and Francois Ruas from IR team. I suggest we use a slide show that we posted this morning on our website as a support document for this conference call.
First of all, this acquisition, we believe strongly, is a perfect opportunity for our Group. With this project, we'll buy one of the leaders in adhesives with strong positions, brands and technologies, will give us position on an attractive market, which is far less capital intensive than the average chemical industry, and which has clearly demonstrated its resilience in the more challenging environment. You have in the slide show one slide with regard to 2009 evolution.
This acquisition is fully aligned with our transformation strategy. It will accelerate the expansion of our high performance material segment and, more generally speaking, of the share of specialties within our portfolio.
It will reinforce both the earnings stability of Arkema, but also improve the credit stability of our result. This point is key for us, as the 2Q results this year have shown that we were probably still less resilient than we thought. The acquisition of Bostik affords us the possibility to have at the same time a more resilient earning, a strong cash conversion and a more limited seasonality of results.
Bostik also, and this is my third point, has a strong improvement potential. If we acknowledge that margins are currently below peers, at 10%, we definitely think that there is a real potential to bring this Group to a level of margin far more in line with its peers, between 14% and 15%.
Certainly this will be done step by step and will be supported by well-identified cost synergies.
What makes us comfortable with this target is that Bostik has already put in place, since now the past two years, a strategy which we have shared, which is pretty similar to ours, based on innovation, development in higher growth countries, and operational excellence. We should already see the first benefits of it from 2015 onwards.
Finally, and is my fourth introductory point, we are confident in our ability to successfully integrate this business within our portfolio. We share, and it's not a surprise with the people that know us, with Bostik the same values, the same entrepreneurial spirit and customer focus. We have been part for many years of the same Group. We know, and I know personally some of the team, and I can tell you these are valuable people.
We also, and it's not always true for all acquisitions, we also have a deep understanding of this business. Before joining Arkema, I spent my career at Bostik, and managed this business in total for several years.
You also know that Arkema has a strong record, and we have a slide on it, but you know it, a strong track record in turning around businesses, whether we are talking of our own story post the spin-off from Total, or the integration of the Total regime. All these points will facilitate the integration of this Group within Arkema. Execution risk on this acquisition is clearly very limited.
Taking into account of all this, I am and the whole management team at Arkema is convinced that Bostik is the right opportunity for our Group; an opportunity that we have now followed since several years and that have materialized in the past few months. We are very happy to enter this new chapter of Arkema's story.
That said, and it's very important, this will not divert us from continuing to implement the rest of our strategy and of our priorities. We know that we have some true challenges, like in fluorogases, where we have to restore the profitability of our business. We have to start also and ramp up our thiochemicals platform in Asia. And we have to integrate successfully the acrylic esters to be acquired in China.
I can assure you that the team is fully dedicated to these priorities, is continuing to work hard, and that we will deliver what you expect and what we have announced on these various projects.
I would like now to give you a few details of this transaction.
Bostik is a EUR1.53 billion group with a 10.3% EBITDA margin and is far less capital intensive than Arkema, with CapEx representing around 3% of sales.
If we look at the value creation, this operation should be cash accretive from the first full year, and EPS accretive from the second year.
We target a 30% EBITDA growth for Bostik over the next three years, based on a strong margin improvement and well-identified cost synergies. This growth excludes valuable commercial synergy, which will exist at the level of both Arkema and Bostik, and that we will more precisely detail after the closing.
The financing is fully secured through a bridge financing, which will be refinanced via a mix of right issue, hybrid issue and bond issue. Thierry Lemonnier, our CFO will come back on these details of the financing at the end of the presentation.
The closing is subject to usual approvals, first, by relevant antitrust authorities, and also to the information consultation of work council at three levels: Arkema, Total, and Bostik.
We think that the closing, or the parts of the closing will take a few months and we'll start these different processes as soon as possible.
Before giving you a little more detail on Bostik business, I would like to mention the dividend which is important for us.
We confirm, naturally, that we will pursue our dividend policy, which is to pay a 30% payout ratio, and not to reduce the amount of the dividend.
To be more clear, of course, this is subject -- this will be subject to the Board review next year, but this would mean proposing a EUR1.85 dividend per share at the next AGM, and that despite a rights issue.
This would mean the same amount of dividend per share EUR1.85 as last year would apply to an increased number of shares. This should demonstrate our confidence in the longer-term prospects for Arkema.
I will now try to give you a few more information on Bostik itself.
Bostik is well positioned on the attractive adhesive market, which is growing above GDP since traditional mechanical fastening is [ongoingly] being replaced by added-value bonding solutions.
It's also exposed to mega-trends with quite interesting solutions in the areas, to give you a few examples, of lightweight materials, energy efficiency and new energies.
Bostik is a global leader in the development of technologically-advanced adhesives and sealants, and has a strong presence in three key sectors.
The first one is non-woven where they have excellent position; they are number two worldwide. They are developing specificities which are used in disposable hygiene products like baby diapers.
This is a segment which shows some growth as you know and where they are a clear technology leader. This is a segment for which we enjoy also growth, as you know, in the acrylic sector, the industry which offers high value-added bonding solution to its customer, and the packaging, transport, wood, oil, electronics.
And finally the sector of construction, end-consumer do it yourself, which offers innovative and sustainable solution for this market with leading brands, and the real potential for further consolidation of the industry in this sector.
We give you in the slide some key competitors, which are not positioned, each of them on the necessary on the same segments; they are Henkel, a German company; the American company, which is HB Fuller; and the Suisse Company, which is Sika.
Bostik has a bit less than 5,000 employees. It's present over 40 countries. They have a strong presence in Asia, Latin America and the emerging region representing between 25%, to 30% of their total sales.
This presence has been developed in the past few years. They have made some acquisition, for example in Brazil some site expansion or a new site creation in China; Brazil; India; Vietnam; or Egypt.
Europe it is significant, about 50% of their sales, but as for Arkema it's gradually decreasing.
Looking at their technology, Bostik is a company which is very well positioned on technology, like Arkema. They have three technology platforms all across their market, which represents 60% of their total sales.
The share of diversified end market, for example transportation, packaging, baby diapers, flooring, hardwood, they have also very powerful brands, well known, highly recognized. And, they have launched recently, a year ago, for what is their global brand, which is expanding step by step, which is a Bostik brand where they have launched the logo Bostik smart adhesive.
They are step by step increasing their focus on innovation. Their percentage of sales with products less than three years old is increasing gradually.
As part of the effort they have refocused their research on three regional platforms, one in each continent, and they will open, before the end of the year, a new R&D center in Compiegne, in France.
Finally, one key highlight of Bostik as I mentioned in introduction is really their proven resilience, with significant upside potential. This is especially true if we look at the 2008/2009 variation.
In this quite challenging economic environment Bostik has been one of the few companies to increase its EBITDA, while, if we were looking at the peers in adhesives, they have slightly decreased. And if we compare to the whole chemical industry, including Arkema, they decreased by over 20%.
I think the stability of the earnings is one of the elements which makes this acquisition attractive.
On top of that, it's a low capital-intensive company. They have CapEx which represents 3% of total sales, and they have some potential to reduce a little bit.
Finally, Bostik presents a strong potential margin which is defined and presented in the slide, and we believe that we can take the EBITDA margin -- current EBITDA margin to 14% to 15% long term.
To wrap it up, Bostik has strong assets, talking about technology brands but also team. We think that by being part of the more focused and true chemical group, like Arkema, by combining the strength of the two companies, they will be able to better value these assets, and they will be able, step by step, to deliver their full potential.
Now let's detail the rationale of this acquisition for Arkema.
You know that Arkema is in the middle of its transformation story. We have deeply transformed the Company making it more resilient, not sufficiently resilient, but more resilient; more downstream; more specialty-oriented with more efficient construction organization.
We are now developing further the Company with an increased focus on growth, with several organic projects like thiochemicals in Malaysia, that you know, which will begin to contribute significantly from 2015 onwards.
Bostik is, for us, then a new major milestone in this transformation.
With this project we will first accelerate our expansion in high-performance material, which will represent around 42% of our total sales once this deal is closed. Bostik itself should represent around 45% of this segments sales.
Thanks to well-aligned strategy between the two groups, in fact, we further some strategy on innovation, energy market, operational excellence, Bostik is an excellent strategic fit for Arkema. And we think that we could enhance the unique combination of a specialty chemical player and an adhesive formulator.
We reinforce the scope of Arkema's leadership position, with 90% of our sales being made in businesses in which we are between number one and number three.
We will build on two groups, having strong ties, similar DNA, and common historical roots. This will, and it's a clear advantage, definitely facilitate integration and increase our confidence in the successful execution of this new project.
This confidence, I think, is reinforced by the track record we have in turning around businesses, whether we are talking of Arkema, for which we multiply by 3 -- around 3 the EBITDA margin. But also the integration of Total Resin, Sartomer and Cray Valley, for which margin is step by step increasing from 9% to 13% in 2013. So we comfortably in line with the objective to take this margin to 14% by 2015.
In order to do the same thing for Bostik, to improve EBITDA margin and grow EBITDA by 30% over the next three years, we have set a clear roadmap.
This growth would be supported by acceleration of operational improvement recently implemented within Bostik that we have described in terms of expansion in emerging countries; recent acquisitions; rebranding; and by well-identified cost synergies in terms of G&A, purchases of raw material, and goods and services, and operational excellence.
On top of that, we have already identified a certain number of development synergies, which are valuable for both Bostik and Arkema. We'll detail them once the closing has been done. But we can already show you that there are geographic complementaries, and the common expansion to certain [emerging] markets should raise a number of opportunities for both our groups.
I will now hand it over to Thierry Lemonnier for the details on the financing of this operation.
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Thierry Lemonnier, Arkema SA - CFO [3]
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Thank you, Thierry.
So our funding strategy is designed, of course, to both protect our balance sheet and maintain our current rating level.
The financing of the offer is secured by a bridge fully underwritten by the Bank Natixis for an amount of EUR1.5 billion, completed by around EUR200 million from our other available resources.
The bridge will be refinanced through three elements. The first is a capital increase for around EUR350 million through a rights issue. The second is a hybrid issue for an amount of between EUR600 million to EUR700 million. And the third is a senior bond issue of between EUR500 million to EUR600 million.
Those operations will be realized in the coming months. The share capital increase will entail preference share subscription rights for existing shareholders.
In terms of gearing, our target will be to go back to 40% by 2017.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [4]
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Thank you, Thierry; I'm sure Thierry will be willing in the Q&A to give more details if you need them.
I will now conclude this presentation with the impact of this project on our mid and long-term targets.
So, as you know, we defined at the end of 2012 during our Investor Day, our plan to get to EUR1,280 million EBITDA in 2016, which as you know, we postponed recently to 2017.
Part of the plan was to make acquisitions, which are contributing around EUR160 million EBITDA. We also at the time defined the divestment plan, with the intention to divest businesses generating a total of around EUR20 million EBITDA,; so net contribution from M&A in our mid-term plan of EUR140 million.
Since that date, we announced the acquisition of Jurong. As you know, we divested several businesses. Because of its size, the acquisition of Bostik will increase, compared to our previous plans, the contribution of acquisition to our mid-term target and will also enable us to further optimize our portfolio of businesses in line with our strategy.
Therefore, we have decided to increase the size of our divestment program. We are now targeting to divest small non-core businesses, which will represent an additional EUR500 million of sales.
To be clear, we had EUR400 million of divestment in terms of revenues in the initial plan, of which we'd made already EUR200 million; EUR200 million remaining. On top of that, we add EUR500 million of further divestment of small non-core businesses.
All in all, if we make the math mechanically, M&A should now contribute a net of EUR170 million, which is up EUR30 million to the EUR140 million, which was in our initial plan. So we have, logically, increased our 2017 target at EUR1,310 million, which is described in the slides. We confirm our long-term target for 2020.
Maybe a few words of conclusion, and thank you for your patience for this long discussion. Bostik is a right move for Arkema, clearly. We have been waiting since we left Total Group for a possibility to purchase this company and this is [then]. There is a natural fit and obvious rationale to change the forces of the two entities.
We are very confident in the successful integration of this business into Arkema, thanks to the strong ties existing between the two groups and the fine mutual respect between the teams.
I am now ready, together with Thierry, to answer your questions.
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Questions and Answers
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Operator [1]
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(Operator Instructions). James Knight, Exane.
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James Knight, Exane BNP Paribas - Analyst [2]
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Maybe start with three questions. Firstly, on the synergies, you mentioned in the press release there'll be no redundancies as a basis of this. Could you give a little bit more detail on where and if you can maybe quantify some of the potential synergies from the combination on a two or three-year view?
Secondly, can you update us on current trading today, how things have gone so far in Q3? Particularly on the US coatings business, whether there's been any rebound; whether you've seen some different trends in PA 12?
And last question and apologies for asking this, but someone's going to have to. In terms of the impact on the management incentivization program, so this is a larger scope than you envisaged in 2012; you're acquiring more EBITDA; you're breaking the gearing constraint.
What impact would this have on the 2016 compensation package? Would it be adjusted or is this acquisition in line with the parameters you envisaged for that?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [3]
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Okay, thank you for these questions; they are different in (inaudible) and I will answer.
On the synergy, it's clear that the synergies are more external. For example, in terms of purchasing of a chemical or raw material, there will be clearly effect of scale and also effect of everything we have implemented within Arkema, which is a very global purchasing. This is the same for goods and services. So clearly from this matter, we will get some significant synergies.
Also, we'll put in terms of operational excellence, based on what we have achieved within Arkema in the past year, so we have some clear ideas of what we can gain. There will be, as we mentioned, no impact on the -- on employment; so synergies are, first of all, external.
In G&A also, we have some obvious synergies, even if we are not on the same businesses. But with our experience, our know-how, we are identifying certain points of obvious synergy between the companies.
We have not disclosed the amount of synergies. We preferred in terms of quantification, because it's clearer and, at the end of the day, there is no discretion. To give you the target evolution over the next three years of the EBITDA starting from EUR158 million, which is the forecast for this year. Our objective is to add 30% by 2017 and, longer term, to reach between 14% and 15%.
As you know, as we prefer to give a clearer target on what we want to reach, in terms of EBITDA, then discussing forever what is synergy, what is the momentum from what they have recently started to develop within Bostik.
What is clear also is that it's a good timing, because recently they have made two very interesting acquisitions in the US and in Brazil. They are starting this new R&D center, which will be quite efficient compared to the current situation for Europe development. Also, they have recently started in China and in India from new plants, which have a strong potential for growth.
I will finish with the current trading. On management incentivization, which is a long-term incentivization we have for 2015, clearly we'll compare like for like; so don't worry on that, I've already been very clear on that. We don't do this acquisition to try to reach our target for management incentivization. There will be the compensation committees that will study very precisely what is the impact on the acquisition compared to our previous plan and we'll make the adjustment; no problem on that.
On the current trading conditions, no, they are in line with what we say in August. There is no big change with our assumption. No improvement or degradation, I think we are really in line with what we said.
It's true for coatings. We don't see a rebound, but we also don't see deterioration. I think rather natural compared to what in mind.
In PA 12, there is a stabilization of market conditions and we don't have this effect of base, which was very strong, as you will remember, in Q2. But we are in line with what -- our comment at the time, so there is no change in our guidance for the year.
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James Knight, Exane BNP Paribas - Analyst [4]
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Okay, thank you.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [5]
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You're welcome.
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Operator [6]
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Martin Roediger, Kepler Cheuvreux.
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Martin Roediger, Kepler Cheuvreux - Analyst [7]
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It's on the profitability of Bostik. Why is the EBITDA margin of Bostik relatively low?
Second, in regards to that, this 10.3% EBITDA margin is an estimate for the year 2014. What was the EBITDA margin in 2013?
And maybe to clarify here also, is the margin 2014 low, because there were some restructurings done so far and this has depressed the margin? So if this is the case then it would be helpful to get an understanding if there is a difference between adjusted EBITDA margin and reported EBITDA margin.
And finally, you expect this 14% to 15% EBITDA margin long term for Bostik. What is your definition for long term, is that 2020?
And finally, you mentioned the details why you think margins will move up to 14% to 15%. So can you exclude any necessary restructurings at Bostik after it has been incorporated in Arkema? Thanks.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [8]
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Okay, many questions, which are more or less on the same point.
So first of all, EBITDA that we announced they correspond to our definition of EBITDA, so there is a -- we are completely consistent. When we talk EBITDA we talk Arkema or EBITDA with Bostik this is exactly the same definition, so we're absolutely clear on that.
The fact that the stability is relatively low is one part of the equity story. I think we believe that within a group like Arkema, which is 100% chemicals, which is also a unique combination of the technology and the chemical culture from Bostik and the chemical formulator culture of Bostik, clearly, is the focus on the profitability, as we have implemented within Arkema, and within Cray Valley and Sartomer will be there.
So I think there is a parallel in the story. I think they have really good potential, good people, as it was the case within Arkema. But we believe there is a clear potential to improve it.
On the long term, yes, it's 2020. Long term is 2020; mid-term is 2017 for Arkema, as you know. In fact, we gave you two guidances, one for 2017, which is quite clear and we cannot be more clear than that. We will add 30% to a base of EUR158 million; so it adds EUR47 million. So I think we are very precise and as we are often.
And for 2020, it's 14% to 15%, which is we believe that with their positioning, the good work they have been doing recently, the quality of the team there, what we can bring as a chemical company and with our culture to Bostik, we can take -- together with their team, we can take them to the average of the industry. We have high confidence there.
And the last point, as you have understood and I think we have been very clear in that, the rationale of this project is not restructuring. We'll have some synergies on cost, but more external than internal.
So there is, I would say the figure that we have presented this include everything. And really the cost to implement the synergy we are talking about is relatively low; so it could be EUR5 million, something like that. So it's really including the whole presentation.
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Martin Roediger, Kepler Cheuvreux - Analyst [9]
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But the margin for 2013, can you disclose that?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [10]
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It's a bit below, but moderately below the one in 2014.
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Martin Roediger, Kepler Cheuvreux - Analyst [11]
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Thanks.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [12]
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But we are on 10%; 10% plus/10% minus, but for 2013/2014.
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Operator [13]
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[Charlie] Pandya, Berenberg.
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Jaideep Pandya, Berenberg - Analyst [14]
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I have three questions. First of all, on the EBITDA bridge slide that you present, just going back to your comment about growing EUR47 million in 2017. So you are roughly going to get almost all the EUR230 million EBITDA growth from Bostik. So can you just give some color on then what is the contribution you are counting on Jurong in the EUR230 million? That's the first question.
Then the second question is really on Bostik itself. You presented a slide which shows a 3% growth CAGR for 2010 to 2014 -- or 2013 for Bostik which is, in my opinion, at least from what growth we saw in 2010/2011 in the chemical industry is somewhat lower. So could you just elaborate why the growth, although stable, was slightly lower maybe compared to some of -- even what you saw in 2010/2011 days?
And then just a third question is really on the valuation of the business and the multiple. If you compare the valuation you are paying for this asset compared to what your current valuation is, it's significantly higher. So how do you justify this valuation, and were you actually competing with other acquirers in this acquisition round? Thank you.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [15]
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Can you ask again the second question? I'm not sure I got it because we are trying to understand which slide you were referring to on the first one; sorry, Jaideep.
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Jaideep Pandya, Berenberg - Analyst [16]
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So the second question is really on the growth, so on the -- I think, just a second; on the slide where you basically show --
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Thierry Le Henaff, Arkema SA - Chairman & CEO [17]
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Do you have the number of the slide, that will be --?
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Jaideep Pandya, Berenberg - Analyst [18]
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Yes, it's number 10; number 10. So that's the 3% sales CAGR that you show between 2010 and 2013; the first slide, on slide number 10 basically which says sustained sales growth.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [19]
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Okay. And your question is what?
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Jaideep Pandya, Berenberg - Analyst [20]
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My question is just that 3%, if you just compare 2010 to 2013 the period where chemical industry it seems like 2010/2011 was a big rebound year for the industry. So even Arkema probably grew more than 3%, so the 3% although it's stable, but it seems slightly lower compared to what the chemical industry saw. So if you can elaborate why growth was lower?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [21]
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Okay, in fact for this question we come back to the previous question, but is part of the upside. We believe that they have demonstrated a good resilience, which is good, a good stability, but there is upside to do better.
So I think to do better in terms of growth, because the market, this is one of the interests of the adhesive market, it's growing at more than GDP, because of the replacement of mechanical fastening by chemical bonding. So normally they should be able to do more.
The good thing is that they have implemented recently, as I mentioned, I will not rename them, but different elements are growing quicker, which were not implemented in the past year. So I think we'll benefit from it, so from this standpoint the timing is quite good.
But, clearly, our message is to say the base is solid; there is plenty of potential; and we can do more in terms of sales growth long term, and in terms of EBITDA margin.
Now in terms of -- with regard to slide 20, which was on the EUR230 million, what we have put and it was where we put it for acquisition, we took for Jurong the EUR70 million -- we take the contribution of the acquisition before.
Other times they come to Arkema, so that is part of the whole Arkema, and we enter it in the organic growth, because we have a platform which is bigger. So we look at the organic growth once they have been within Arkema.
So you have EUR158 million, which is EUR160 million to make it simple, from Bostik plus EUR70 million from Jurong. You have EUR230 million.
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Jaideep Pandya, Berenberg - Analyst [22]
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Okay, all right; very clear. Very clear, thank you; very clear. And just on the rationale for the multiple, given that it's significantly --
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Thierry Le Henaff, Arkema SA - Chairman & CEO [23]
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To make it clear and simple, the multiple is a multiple of this sector. So it reflects the multiple of this sector, so there is no more comment about that.
With regard to other acquire, it's not my -- I have no comment on that. We are the acquirer, so I think it's clear; it's Arkema, it's not another one, so I have no comment on that.
With regard to the evaluation, I remember the comment that we made the acquisition of Jurong where we say it would be, mid-term, 5 times. People say, yes, I know, it's a low multiple; you know the profit is volatile, so you reinforce your volatility. At the end of the day, we are -- Arkema is, as I always mention, in terms of acquisition and this is -- it was in our -- planned acquisition.
We have some acquisition. We have lower multiple where we have it complete our portfolio, but maybe a more volatile business. This is the case for Jurong.
And with regard to the adhesive market, it's a market which is growing at more than GDP, which is quite resilient, which has a low CapEx intensity, and which is very close to the end consumer. For that it deserves this multiple.
At the end of the day the story of Arkema is made of different elements: acquisition; a different multiple of organic growth; restructuring. And it makes the Arkema -- and clearly it will improve its part of the equity story, it will improve further the profile of the Group. So it's a whole package.
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Jaideep Pandya, Berenberg - Analyst [24]
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All right, thank you so much. Thank you and congratulations.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [25]
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Thank you very much, Jaideep.
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Operator [26]
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Laurent Favre, BofA Merrill Lynch.
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Laurent Favre, BofA Merrill Lynch - Analyst [27]
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Three questions if I can. The first one is on the process really of the acquisition. According to some press articles a lot of potential buyers were looking at this and the rumored acquisition consideration was actually higher than what you're paying, so can you maybe tell us a little bit more about the process? And also some of those buyers actually had some synergies and were adhesives players, so I'm really interested on this side.
The second question is on divisional management and the organization of Arkema. So you're adding complexity to a division which was already dealing with a few challenges like polyamide 12, PDVF; and, if I'm not mistaken, the divisional management of HPM is also in charge of fluorochemicals. So could you maybe tell us a little bit more about how this division is going to be run, and whether or not the management of Bostik is staying, and whether or not they could take on a more important role within Arkema?
And then the third question is on disposals. You're indicating about EUR40 million of EBITDA, EUR500 million of sales, and so about 9% EBITDA margin of those new non-core assets. Could you talk about really where they are, where they're fitting in right now in Arkema? And whether we're talking [here] about this three-year view on how those assets are going to exit Arkema or whether you are not you are going to accelerate this and put those businesses on the block in the next six or 12 months? Thank you.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [28]
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Okay. Thank you, Laurent, for your questions which are, as always, very relevant. There are some answers which I can disclose; some are more difficult.
But on the divisional -- I will take the second question. First of all, in terms of we should not, because PA 12 has been difficult, and we recognize that and we are addressing the point in Q2 2014, gives the image that we have a big issue on HPM.
HPM, we know where we come from. We have made significant improvements. We have very strong businesses. As we mentioned, next year, for example, specialty chemical will be very, very stronger.
PDVF is not a challenging business unit. PDVF this year is doing pretty well. They have -- as we mentioned several times, they have a benefit from a couple of years from an incredible context; photovoltaic and in oil and gas. So, they have lost from this very high base in the last two years, but they are really, step by step, regaining what they have lost.
So, what is clear is that, but this is also the nature of HPM. It's, by definition, diversified; it's a strength, but is also the challenge to manage. But, at the end of the day, it's not a level of diversification which is especially difficult to manage.
Now, your point is good, is: what will be the organization? It will be within HPM. What will be the organization? It's too early to say. As you can imagine, we have to go to the closing, then the new organization will be announced.
Clearly, we count on the management of Bostik, which will follow, so I answer clearly on your question. To be part of the new, let's say, challenges of the whole Group, clearly, but it's too early to give more detail at that point, as you can imagine.
But clearly, we will have quite a strong management to manage the whole HPM group and part each of the business units, don't worry on that, and it's permanently on our mind.
On the process, I know only one process. I know my discussion with Total Group and this is what we have announced today. With Total starting the presentation, in order to be able in several months to close, together with us, this project, they will start information and the consultation to the works council concerned.
The other processes, what has been said about potential competitors, other people interested, I don't know at all; I've no clue.
I cannot answer, because we have not been contacted by people that would be interested by Bostik. Maybe Total has been but not us, by definition, so I have absolutely no clue and I don't know.
But what you are seeing is interesting, because it shows that attractive Bostik as a company, and the adhesive market is quite an attractive market. We are very proud to have this opportunity with Total to make this acquisition, and I think it's a wonderful project for Arkema and --
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [29]
------------------------------
So, sorry, to your knowledge it wasn't a competitive option; I mean a bidding process?
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [30]
------------------------------
I think I will not give the detail of the process. It's up to Total to give more information, if they want. What I can tell you is where we are today, which is on the point interesting. You know what we buy for which price.
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [31]
------------------------------
Okay, thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [32]
------------------------------
I think beyond that is impossible to comment for me, as you can imagine.
On the disposal, your point is fair. It's clear that compared to our previous plan, this mean some acceleration is clear. I cannot give -- as you know, these are not big business units, so it will be a sum of different elements that will be certainly spread over the different business segments. We have three business segments and they will be spread over.
Clearly, we have some ideas but we don't want also to disrupt our organization and our people. So, it's like restructuring; you don't announce before, you announce when you decide.
But in terms of timing, we'll not wait too long to start the process. It's not a bad time also to make some disposals, as you know. So, we will not wait too long.
Now, it will be [ASEAN]; it will be over the next three years, by definition, because it's for 2017. But it's not -- it will not be achieved last year. We start before. So -- and then the announcement will come step by step.
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [33]
------------------------------
Okay.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [34]
------------------------------
Okay, merci, Laurent; thank you.
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Operator [35]
------------------------------
Geoffrey Haire, HSBC Global Research.
------------------------------
Geoffrey Haire, HSBC - Analyst [36]
------------------------------
I was just wondering -- just a couple of questions. The 30% increase in EBITDA, is that Bostik's current plan that they have or does it also include the synergies that you expect to get out of the business?
Secondly, I was wondering if you could just talk a little bit about the historic performance of Bostik. Obviously, given it's hidden inside Total, it's very hard to see. But has this business historically had margins in line with the peer group; and, if it had, what has changed to mean the margins were below?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [37]
------------------------------
So, on the first question, I think the slide -- that everybody is on the same page, we'll give you the slide [page to you].
Yes, page 18 is quite clear, includes both, and I say at the beginning that we didn't want to split it, because (inaudible) for ever what is the current momentum, what is the synergies. I prefer to give you a target and you know exactly where -- what we achieve and this is the way we work.
30% operational improvement and development (inaudible) implemented at Bostik, the synergies that we have well identified. So, to answer your question clearly, they include both.
With regards the past performance of Bostik, we have no more detail to give than what we give today. What we say is that we had a good stability of this performance, which is important, but with upside potential, because this performance was below peer, which has been the case in the recent years.
I think the potential is there. The quality is there; quality of organization; quality of business line; and quality of [rents]. But I think that we can accelerate development of this company and the -- and there is absolutely no reason today why Bostik should not be in the average of the peer. So --
------------------------------
Geoffrey Haire, HSBC - Analyst [38]
------------------------------
Could I ask the question another way? When you ran the business, were the margins in line with the peer group then?
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [39]
------------------------------
It was not far, but it's a long time ago.
------------------------------
Geoffrey Haire, HSBC - Analyst [40]
------------------------------
Okay, thank you.
------------------------------
Operator [41]
------------------------------
Andreas Heine, Barclays.
------------------------------
Andreas Heine, Barclays - Analyst [42]
------------------------------
Yes, two questions, if I may. The first is on the chart 20 again. This Jurong acrylic acquisition you have put in with EUR70 million, is that based on the two plans and which year you have taken them for calculating this number? Is it 2015, when you really consolidate the business, or is it 2014?
The second, your targeted gearing, does that already include proceeds from the disposals or is that based on what you have in hand right now?
And maybe, last but not least, in one of the slides you mention for the plans an as of 2018 acquisitions. I would assume after this big step and the acrylic acquisition that no other sizeable acquisition will come in the next three years. Is that a fair assumption?
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [43]
------------------------------
Okay. So, answer will be quick and clear. So, on the last one, yes, no other sizeable acquisition in the next year; this is obvious.
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Andreas Heine, Barclays - Analyst [44]
------------------------------
The next three years I mentioned, so in the --
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Thierry Le Henaff, Arkema SA - Chairman & CEO [45]
------------------------------
The next three years, yes. So, no other sizeable acquisitions in the next three years. That I think is clear.
On Jurong, no, I think Jurong has been clear. The EUR70 million -- so, in 2017 we -- this is what we announced when we make the acquisition. In fact, if you remember well, we announced, for the two lines, EUR350 million of acquisitions and EUR70 million, 5 times EBITDA.
So, I think it was -- everything is really we are still on the same page, except, as we mentioned, the starting point will be more in the low conditions. But this is one of the reasons why we pay such a price, but we are considering to take it to EUR70 million on the two lines. And the targeted gearing includes divestments.
------------------------------
Andreas Heine, Barclays - Analyst [46]
------------------------------
Thanks. Maybe one question on Jurong again. So, the Jurong EUR70 million is a projection of -- until 2017, whereas the Bostik number in the calculation on slide 20 is the 2014 number. Is that right?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [47]
------------------------------
No, but for Jurong --
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Andreas Heine, Barclays - Analyst [48]
------------------------------
You mentioned at the beginning that EUR150 million was the plan for -- highlighted in 2012 and you said that the -- on an earlier question that the EUR158 million of Bostik is added to this and that the growth in earnings from Bostik, from now to 2017, will be part of the organic growth. And I just wanted to know whether that is the same calculation for Jurong, or whether you have a different assumption for the EUR70 million in the same slide?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [49]
------------------------------
But it's completely different Jurong, it's a matter -- when we made the acquisition of Jurong, we say it's, in fact, an investment that we made earlier than what we planned at the beginning.
We have not refilled the plant, and what will make the difference on the profit, is market conditions, not like Bostik, a development and a sort of organic growth or whatever. It's just that the starting point in 2014, for Jurong, is not mid-cycle; it's more low cycle, but I think it's consistent. Except that Jurong is the plant that you fill, and you fill it nearly immediately, and then you have the market condition.
We could reach the EUR70 million. We will be mid cycle in 2015, we'll be at [clearly], and then there are two lines also. Okay, [and we start with] one line, and just in the middle of the year that we will get the second one.
No, I think it's pretty consistent. Our method, I think you could debate the method, is that when we make an acquisition, we take the profit when we make the acquisition and then it's part of the whole Company, it's part of the organic growth.
With regard to Jurong, it's a little bit specific, because it's asset that we feel when we have it, so the first line will fill it very quickly. The second line we will fill it very quickly; so you have a ramp up of these two lines.
Okay, so -- and then if you take line by line, then it's more a matter of where you are in the cycle, I think to see with developed [markets].
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Andreas Heine, Barclays - Analyst [50]
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Yes, and the EUR70 million is a more, let's say, in mid-cycle, number, fully loaded?
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Thierry Le Henaff, Arkema SA - Chairman & CEO [51]
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Yes, exactly.
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Andreas Heine, Barclays - Analyst [52]
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Okay, understood, thank you a lot for the clarification.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [53]
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Okay, you're welcome.
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Operator [54]
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Charlie [Pandya], Berenberg.
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Jaideep Pandya, Berenberg - Analyst [55]
------------------------------
Just could you tell us what is the ROCE of this business, and how do you expect to improve the ROCE, going forward, please? Thank you.
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Thierry Le Henaff, Arkema SA - Chairman & CEO [56]
------------------------------
Okay, maybe I will pass over to Thierry, he has to work also; so, Thierry, please.
------------------------------
Thierry Lemonnier, Arkema SA - CFO [57]
------------------------------
Okay, so, Jaideep, obviously for the first year, the ROCE will be relatively low, but it will be higher than the cost of the debt, the external debt.
And as from the third year, we will be above the average cost of capital, for the acquisition. Which means that the ROCE will match the average WACC of Arkema some time beyond the third year.
------------------------------
Jaideep Pandya, Berenberg - Analyst [58]
------------------------------
So around 8%, 9%, is that a fair assumption?
------------------------------
Thierry Lemonnier, Arkema SA - CFO [59]
------------------------------
Yes, absolutely; absolutely.
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Jaideep Pandya, Berenberg - Analyst [60]
------------------------------
All right, and just a -- what do you plan to raise, roughly what sort of financing charge -- should we expect additional financing costs from this acquisition?
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Thierry Lemonnier, Arkema SA - CFO [61]
------------------------------
Under the IFRS rules, in the P&L you will only have the charge related to the bond issue -- the senior bond issue, while the hybrid charge will be considered as a dividend.
So probably it would be fair to consider that the bond part of the hybrid could be considered as an additional charge. But in the P&L, you won't find it as a charge. So the additional P&L charge will be limited to the interest on the EUR500 million to EUR600 million senior bond.
------------------------------
Jaideep Pandya, Berenberg - Analyst [62]
------------------------------
Okay, and tax rate of 30% is fair, if I assume --?
------------------------------
Thierry Lemonnier, Arkema SA - CFO [63]
------------------------------
Yes, yes, absolutely.
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Jaideep Pandya, Berenberg - Analyst [64]
------------------------------
Thank you, thank you so much, Thierry.
------------------------------
Operator [65]
------------------------------
Laurent Favre, Bank of America.
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [66]
------------------------------
One question for each of you. The first one maybe for Thierry Lemonnier, on the pre-tax split of Bostik, and whether or not we can assume that there's a different chunk of French pre-tax profits in Bostik, and therefore maybe it can help you on (inaudible) the different tax asset value, the credit loss part.
And the second question is for Thierry Le Henaff. Could you talk about the strategy to reduce the merchant acrylics exposure?
I was under the impression that that could be done maybe via an acquisition portion and you just said that no significant acquisition is going to be seen for the next three years. So can you maybe go back to the point on reducing merchants' exposure in acrylics? Thank you.
------------------------------
Thierry Lemonnier, Arkema SA - CFO [67]
------------------------------
Okay Laurent, so I will take the first part of your question. For deferred tax asset, it's obviously too early to give a precise figure; we need first to define the cost purchase allocation, the price allocation.
What I can say is that we should benefit from a certain few millions of tax advantage from the acquisition, and we will give more precise figures in the coming weeks or months.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [68]
------------------------------
Laurent, with the -- it's a good and fair question, because we have always said that acrylic downstream development will be from organic and from acquisition. It's true that today, since we have invested significantly in China [Metal], so we have made an acquisition in Brazil.
We have a base for next couple of years really, to develop very significantly, in acrylic. And what we say when we made the acquisition of Jurong, was that to accelerate this development in Asia, where we have really between the site of Coatex, the site of Sartomer and a site of Arkema coating resin really big potential for growing.
We needed the upstream and we have it now. Now, we will really develop more taking advantage of the recent acquisition in Brazil, and from the organic development.
Now, and you know that our acrylic downstream, the priority is to develop in Asia, because this is where we will be massively merchant. And in Asia, there are never the acquisitions; there are some very small -- some smaller acquisition, and we'll have still the room to do that. It's not a problem.
So with this combination, up until 2017, that should be okay. Knowing that on top of that, we work since we are the leader on the merchant, working a lot also on industrial contract, based on cost plus, which are very stable, which are merchant metal, so we should bring a lot of stability, even more than when you have a downstream. So we work in [partner] with that.
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [69]
------------------------------
Okay, (inaudible) you mean?
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [70]
------------------------------
No, no, I mean on different, I will not talk -- as you know, we never comment our commercial contract, and -- but it's fair that you try and, no, it's on different business.
It's outside of coatings, we say that coatings, we are really -- this is where we are -- what we call captive. So outside of coatings, where we don't compete with our customer, we try to reinforce this kind of relationship; so it could be (inaudible), but also in water, or oil recovery, or whatever.
------------------------------
Laurent Favre, BofA Merrill Lynch - Analyst [71]
------------------------------
Okay, thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [72]
------------------------------
Thank you, Laurent.
------------------------------
Operator [73]
------------------------------
Martin Roediger, Kepler Cheuvreux.
------------------------------
Martin Roediger, Kepler Cheuvreux - Analyst [74]
------------------------------
I have three follow up questions. First on news from Bloomberg, where we see that you have an exclusivity period to take over Bostik, what is the duration of that exclusivity period?
Second question is on, did you talk about that deal in advance, with the rating agencies, and what did these rating agencies tell you on that deal?
And finally, Bostik's mid-term target is 14% to 15% EBITDA margin, but this is below Arkema's EBITDA margin target of 16% in 2017. So it's dilutive to your target. What is the risk for you to abandon the 16% EBITDA margin target, at Arkema, for 2017?
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [75]
------------------------------
Okay, so there is no risk, otherwise we would have mentioned it today. You cannot -- so two things.
First of all, it's part of -- when we have confirmed the 16%, which we do confirm the margin target, it's including Bostik, but also taking into account, and Laurent Favre made calculation for all of us, so the disposal. So all in all, with the progress from Bostik is not diluting, so it's really very consistent with everything we have announced, and all the calculation.
But we are rechecking in very detail, all these calculation. On the level of margin, EBITDA, I know we're communicating EBITDA and we didn't want to change for this acquisition. But you cannot compare, it's -- we are talking 14%/15% with amortization/depreciation of 3%.
In the current universe of Arkema, we are more or less -- I have said our competitor are around 6% of the CapEx, it's 3 points. So 14%/15% in EBITDA, for company like Bostik it's equivalent. If you look at the EBIT level, which is more relevant, it's equivalent to the 17%/18% for a typical diversified chemical group. So you should have that in mind.
It's very low. It's a low capitalistic company for a chemical company. So -- and this is also what create the resilience of this business.
So no, I think the numbers that we are putting, are really quite good numbers. And in term of financial performance, if you look at also the net result and everything, it will be really very consistent with what we have announced with Bostik -- with Arkema.
You have seen also that we were at -- if you look at the past, we were at 6% around in CapEx, if you exclude some very big CapEx, like thiochemicals and Kerteh, which is a one-time CapEx.
We have put as a target together combining both Arkema and Bostik, 5.5%. So you have the dilution of the margin, but in fact since we are making some disposal you don't see it. But, in fact, you have the benefit on the CapEx side.
Sometimes, some people ask us what is your mid-term target in terms of CapEx and we have answered 5.5%. So we are pretty also consistent with this guidance.
With regard to the process and the news from Bloomberg that I will not comment on. No, I think it is very clear, and it's clear also in the press release from Total.
We have made an offer. Total is supporting this offer favorably and the objective of the two company, but respecting certainly the traditional, usual process, particularly with working particularly with the working council is to, as soon as possible, which mean in the next few months, to have the closing of the process.
So I think it's really a traditional process and the (inaudible) period is in term -- even if we don't disclose the length, has been well dimensioned to complete fully this process. So there is no hurry on that.
Thierry?
------------------------------
Thierry Lemonnier, Arkema SA - CFO [76]
------------------------------
Okay, so I take the answer to your question about the rating agencies.
We are starting a discussion with them. We expect obviously their position pretty soon, because it's a key element for the financing. But I cannot provide you more precise information at that stage on the timing at which both of the two agencies, Standard & Poor's and Moody's, will release their position on the deal. But it should come pretty soon.
------------------------------
Martin Roediger, Kepler Cheuvreux - Analyst [77]
------------------------------
Thank you.
------------------------------
Operator [78]
------------------------------
Carolyn Bruger, Credit Agricole.
------------------------------
Carolyn Bruger, Credit Agricole - Analyst [79]
------------------------------
Thanks for taking the questions, which are probably more for Thierry Lemonnier.
First of all, Thierry, I would like to know whether you are taking some pension liabilities from Bostik, and if we can have an order of magnitude?
Also to clarify on the gearing target, 40% by 2017, you are adjusting with the hybrid bond, which will be booked as equity, or is it including that hybrid? Thank you.
------------------------------
Thierry Lemonnier, Arkema SA - CFO [80]
------------------------------
Regarding for the pension amount, it's too early to give -- to provide you a precise figure, because we have to wait for the closing to have the definitive figure. However, the amount will be limited and it is included in -- an estimate will be included in the payment that we will make on the date of the closing.
For the gearing, the objective is to be at 40% on a clean basis, I would say.
------------------------------
Carolyn Bruger, Credit Agricole - Analyst [81]
------------------------------
Okay. Thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [82]
------------------------------
Just to complete, Thierry, the pension by definition is including (inaudible).
------------------------------
Carolyn Bruger, Credit Agricole - Analyst [83]
------------------------------
Okay.
------------------------------
Operator [84]
------------------------------
James Knight, Exane.
------------------------------
James Knight, Exane BNP Paribas - Analyst [85]
------------------------------
Actually, Thierry, I didn't quite catch your addition to the end of that pension discussion, if you'd mind repeating it, to start off with.
------------------------------
Thierry Lemonnier, Arkema SA - CFO [86]
------------------------------
We have an estimate of the pension -- the pension liabilities, and the definitive figure will be the one on the closing, so it's too early to say. My point was that the amount is limited and taken into account in defining the price we are paying.
------------------------------
James Knight, Exane BNP Paribas - Analyst [87]
------------------------------
Okay. Maybe a couple of questions, firstly on sourcing, and I should know this, but I presume Bostik is, at least partially, back integrated into Total. If that's a right assumption, and given that Total is continuing to address European asset base, have you been able to, or will you seek to secure some of this sourcing, or some of that sourcing, on a long-term basis?
Secondly, is there any significant difference in profitability? If you look at the three business lines of Bostik, or are they fairly similar? Thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [88]
------------------------------
Okay, on the sourcing, no, I think really Total is quite limited supplier so there is absolutely -- so there is no issue on that because it's quite limited. It's win-win and it will be secure.
So, it's not an issue at all, if it is your question. There is absolutely no hurry, and that's inclusive with European assets or whatever, it's there are some of the smaller clients. So it's not a -- don't forget that different for certain like Arkema, for example acrylics, which is acrylic monomer is intermediate chemicals.
Bostik is two steps downstream, so then you have compared to our specialty polymer and then you have formulators. So Bostik is not depending on the big -- on purchase volatility or whatever, they are far in the chain -- in the value chain they are far later. So there is absolutely not this kind of issue.
But we're absolutely convinced that since Bostik is far closer to Arkema in terms of business models than Total, on the contrary, there will be [a suitable] purchasing synergies between the two companies.
In fact, by the way, and this is also one of the positive element, is not the biggest one, but is one the positive element of this acquisition, is that Arkema has some specialty polymer that we will be able to supply more to Bostik than today. In fact, we are more a natural supplier to Bostik than Total, because we are more downstream in the chain than Total Petrochemicals.
With regard to the different business line; yes, there are some difference by I cannot give more information. But there are some differences, but it's not a big point.
------------------------------
James Knight, Exane BNP Paribas - Analyst [89]
------------------------------
Thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [90]
------------------------------
You're welcome. We'll take maybe a last question, if there is.
------------------------------
Operator [91]
------------------------------
[Charlie] Pandya, Berenberg.
------------------------------
Jaideep Pandya, Berenberg - Analyst [92]
------------------------------
Sorry, yes, it's the last question. Just going back to your comment, Thierry, about when you were running this business back [it was] when it was in Total, the profitability was similar to peers. Obviously, currently the profitability is slightly lower. And you've said that you've been following this business, it's a great opportunity for Arkema.
In your opinion, what has triggered the drop in profitability, just following it from the outside? I know it's a bit of a difficult question but just curious to know why the performance has gone backwards.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [93]
------------------------------
Frankly speaking, I will -- first of all, I was answering a question which was ask, so it was not a comment; it was an answer to a question, so I just mention, for the sake of the question, that it was not far from competitors. I don't think it is so interesting what happened 10 years ago -- almost 10 years ago.
Then for the rest, I don't think we need to go more for detail. I think plenty of things have happened.
No, I think what is more important is that what they have demonstrated is the stability of result at a point which is lower than our peers. What has been implemented recently, because I think we should -- they have implemented recently with the management, and I have a really high regard for the current management, is really very, very clever.
What they have launched in terms of recent acquisition, small bolt-on but it's enough (inaudible), also, new plant and some efficiency measures, I think is really very good and we will benefit from it starting next year. So I prefer to put the emphasis on that. I mean the past is the past.
------------------------------
Jaideep Pandya, Berenberg - Analyst [94]
------------------------------
Okay. Thank you.
------------------------------
Thierry Le Henaff, Arkema SA - Chairman & CEO [95]
------------------------------
You're welcome Okay, thank you, to all, for this -- I would say, first of all, all the time that you have dedicated to this conf call, and especially with such short notice.
As I mentioned, I think it's really a great project for Arkema, which will create, step by step, a lot of value.
But we are really at your disposal after this conference call to continue the discussion, and also to have some face-to-face meetings in order to tell you in more detail all the value we believe there will be in this acquisition.
Thank you, again, for your time and looking forward to see you again or talking to you again. Thank you.
------------------------------
Operator [96]
------------------------------
Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.
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