Following an in-depth investigation, EU antitrust officials have issued a statement of objections to the proposed acetate tow joint venture between Celanese and Blackstone.

The European Commission opened its investigation last October on concerns that it would create a new market leader in an already highly concentrated market. Celanese and the private equity group it was once owned by are already the respective second and third largest acetate tow producers worldwide.

The Texas-headquartered chemical produce planned to its cellulose derivatives business unit, which makes the tow, including its equity interest in existing jvs with China National Tobacco. Blackstone had agreed to contribute its Rhodia Acetow business bought from Solvay in mid-2017.

Celanese plans to own 70% of the jv and would receive a $1.6 billion dividend payout as part of a recapitalization upon completion.

Responding to the undisclosed objections, Celanese said it continues to work cooperatively with the Commission toward a successful close of the merger, and that it “remains committed to creating an acetate tow supplier that provides an increased ability to serve customers efficiently and reliably, while enhancing opportunities for innovation and productivity.”

When the jv was first announced in June 2017, Seth Goldstein, an equity analyst with US investment firm Morningstar, gave just a 50% probability that the deal would close as planned. “Although the market reacted positively, we’re skeptical of the long-term value created,” Goldstein said.