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Published by:
Institute for Management Development (IMD) (2010)
Version:
15.09.2010
Length:
16 pages
Data source:
Field research

Abstract

This is the first of a three-case series (IMD-3-2045 to IMD-3-2047). It was late morning on 21 January, 2004 and Dr Robert Easton was enjoying the beautiful sunshine and crisp mountain air on the ski slopes of Davos, Switzerland when his mobile phone rang. It was a call from Ken Greatbatch, the former CFO of Vantico, with very interesting news: Clariant''s attempt to auction off its operating division, AZ Electronic Materials (AZ-EM), had failed. There was now a great chance of an exclusive deal for Carlyle to acquire the company. Clariant needed to make the deal happen, and fast; it had promised shareholders and analysts during the summer of 2003 that it would reduce its debt level by almost 800 million euros. Six months had passed and the company had very little to show for its efforts. To dispose of its division, Clariant had initially engineered an auction among AZ-EM''s closest competitors, but had not succeeded in finding a suitable buyer. Faced with the failed auction, increased pressure from shareholders and a clear need to raise cash rapidly, Clariant resorted to its second-best option - a negotiated sale with a qualified private equity buyer. The Carlyle Group immediately voiced an interest and offered to expedite due diligence if a deal could be negotiated rapidly. Speed was now of the essence for Clariant''s top management team, who were very keen to figure out how quickly Easton and his team could move. The learning objectives are: (1) buyout; (2) due diligence; (3) managing transition; (4) turnaround management; (5) leverage; (6) incentives; and (7) restructuring.

Topics

Buyout; Private equity; Turnaround; Leverage; Chemical industry; Incentive structures
Location:
Size:
Market cap CHF500 million
Other setting(s):
2004-2009

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