Picanol Says $255 Million Tessenderlo Stake to Aid Growth
Picanol (PIC) said the Belgian weaving-equipment maker’s 192.4 million-euro ($255 million) investment in Tessenderlo Chemie NV (TESB) fits within a strategy of diversifying to reduce reliance on the textile industry.
Picanol had the cash available to purchase the French state’s 27.6 percent holding in Tessenderlo, and talks were completed late yesterday, Managing Director Luc Tack said in a phone interview. The Ieper-based equipment manufacturer has no plans at the moment to increase the stake further, he said.
The equipment manufacturer agreed to pay 22 euros a share, or 8.1 percent more than yesterday’s closing price, for Brussels-based Tessenderlo, a maker of water-treatment chemicals and food ingredients. Picanol is looking at entering other industries to become less depenent on the cyclical market of weaving machines, where it’s the world’s biggest producer.
“Like it always goes in negotiations, we think we pay a little too much and the seller thinks it’s not enough, but finally in the late hours we were able to come to an agreement,” Tack said.
Tessenderlo jumped as much as 5.5 percent to 21.47 euros and was trading up 3.7 percent at 11:09 a.m. in Brussels. The stock has declined 15 percent this year, valuing the company at 669.5 million euros. Picanol rose 1.7 percent to 21.46 euros.
Tessenderlo is under going a transformation under Chief Executive Officer Frank Coenen to increase profit. It has sold commodity plastic and compounds businesses to focus on higher-margin food ingredients and gelatin-based products.
A decision on what will happen to the three board seats held by France has yet to be made, Tack said.
“After the closing of the deal, we’ll come to a conclusion on this,” Tack said. Picanol’s investment will bring stability to Tessenderlo as it pursues a growth strategy, he said.
The investment coincides with the planned sale of a competing gelatin business by Dutch meat producer Vion Food Group Ltd. The ingredients division may fetch about 1 billion euros and initial bids were handed in this week. The asset has drawn broad interest from private equity firms including PAI Partners and CVC Capital Partners Ltd., according to people with knowledge of the situation.
Vion is owned by NCB Ontwikkeling, which is closely affiliated with the Dutch farming and gardening advocacy group Zuidelijke Land-En Tuinbouworganisatie, according to the company’s website.
Tack said his company’s investment in Tessenderlo isn’t related to the Vion situation.
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