Business Concentrates MERGERS & ACQUISITIONS
Europe kills one chemical deal, allows another
The EC has blocked a merger between Blackstone and Celanese businesses that make cigarette filter materials.
Antitrust regulator blocks acetate merger but clears Bayer-Monsanto deal, with conditions Celanese and the private equity firm Blackstone have abandoned plans to merge their cellulose acetate businesses after they were unable to agree to terms with European antitrust authorities. The companies had announced plans to merge the businesses, which produce material for cigarette filters, in June 2017. Blackstone owns the former Rhodia acetate business, having bought it from Solvay in 2017 for $1.1 billion. Celanese, which runs a similar business, was set to own 70% of the combination, which would have had annual sales of about $1.3 billion and 2,400 employees. Celanese contends that regulators required excessive divestitures that would have eliminated the benefits of the transaction. “We worked hard and offered serious remedies to the European Commission and believed we had solved all competition issues identified,” CEO Mark Rohr says. Approval, without any divestitures, was granted in Mexico, Turkey, China, and Russia, Celanese says. Rohr plans to have a new strategy for the business in place in
time for an investor event on May 1. Meanwhile, the EC has approved Bayer’s acquisition of Monsanto on the condition that Bayer sell more than $7 billion worth of businesses in areas including field crop seeds, vegetable seeds, glufosinate herbicides, and digital farming tools. Bayer says it has agreed to sell these businesses to BASF. The deal has yet to gain approval from the U.S. Department of Justice. Nevertheless, Bayer says it is now on track to complete the acquisition in the second quarter. Bayer first agreed to buy Monsanto for $66 billion in September 2016. The Celanese-Blackstone and Bayer-Monsanto deals are two of four proposed chemical tie-ups that have been undergoing in-depth EC antitrust investigation. The others are the merger of Linde and Praxair and Tronox’s planned acquisition of Cristal. Only two other deals—one in steel, the other in eyewear—are currently subject to such scrutiny in Europe. Kevin McCarthy, a stock analyst at Vertical Research Partners, asserts that the Celanese-Blackstone deal collapsed
because the EC is taking a “harder line” on cross-border M&A. “We are not terribly surprised by the outcome, as we had viewed antitrust risk in Europe as a formidable deal risk from day one,” he wrote in a note to clients. But Paul Hodges, head of U.K. consulting firm International eChem, argues that the deal fell apart because it was motivated by low interest rates and shortterm gain rather than long-term business strategy. “With short-term benefits reduced by the regulator, the deal had no rationale,” Hodges says. “Rather than the EU getting tougher, the current spate of antitrust investigations simply reflects a spike in the number of megadeals the chemical industry has been arranging to take advantage of cheap money.”—ALEX SCOTT
START-UPS
Tapping into the blossoming field of immunometabolism, Rheos Medicines has come out of stealth with $60 million in funding from Third Rock Ventures. The Cambridge, Mass.-based biotech firm will initially develop small molecules to treat autoimmune diseases such as inflammatory bowel disease, vitiligo, and lupus. While many areas of drug development are moving toward personalized medicine—most notably in cancer, where targeted therapy has proliferated—immunologists still rely on one-size-fits-all treatments for their patients. Rheos hopes to change that. Starting last summer, the company assembled a
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C&EN | CEN.ACS.ORG | MARCH 26, 2018
drug discovery platform based on findings from its academic founders, whose work focuses on how a cell’s metabolic pathways can control its fate. Cells, like people, get their energy from different sources, explains Rheos’s chief scientific officer, Laurence Turka. “You know how you feel different if you have two slices of pizza for lunch instead of a salad? You behave differently.” Cells are no different, he says. They can use different metabolic pathways depending on their state. Rheos wants to tune those metabolic pathways to alter the behavior of cells. “Immune cells are not inherently bad or deficient, but in disease states they’re just
not doing what we want them to do,” CEO Abbie Celniker says. Currently available antibody drugs target immune cells themselves, treating disease but also turning off the beneficial effects of those cells. Rheos hopes its tuning approach will instead bring immune cells back to a healthy state, preserving their useful functions. The company’s technology is intended to identify drug targets along the various metabolic pathways. That work should also reveal related metabolites that can be used as biomarkers to find patients who will respond to the drugs. In addition to autoimmune diseases, Rheos will explore new immuno-oncology targets.—LISA JARVIS
C R E D I T: C& E N /S H UT TE RSTO CK
Rheos launches with immunometabolism focus
