Indorama Ventures concludes USD2 Billion acquisition of Huntsman integrated EO & PO assets

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL), a global chemical producer, has completed its acquisition of Huntsman’s world-class integrated oxides and derivative businesses, including a large flagship site on the US Gulf Coast (USGC) at Port Neches, as well as Chocolate Bayou and Dayton in Texas, Ankleshwar in India, and Botany in Australia, as per IVL's press release.

The acquisition is a profitable and growing end applications business along with unique products and geographical profile among the crowded olefins space. It has a well-integrated assets base with an extensive infrastructure and future expansion possibilities. The area is adjacent to many USGC feedstock suppliers. The cash value of USD2.0 billion makes it the largest acquisition by Indorama Ventures ever and now our capital employed is nicely spread over plastic, chemicals and fibers. The transaction value translates to an EV/EBITDA of ~5.7x and is expected to add substantial synergies to Indorama’s existing 450kta Ethane/Propane Cracker and our 550kta EO/EG. IVL will now be integrated from Ethane to PET as well as the high-margin EO and PO derivative businesses.

This acquisition reinforces IVL’s Integrated Oxides and Derivatives (IOD) segment’s continued development as envisaged in our strategy announcement in February 2019 and includes much sought after portfolios of value-added EODs and Propylene Oxide (PO) Derivatives, each coming with its own strong market position. The acquisition comes with its own strong R&D and technical capabilities apart from portfolio of about 900 patents and other intellectual properties. Entry into Australia will further diversify Indorama’s geographic presence. The Huntsman and Indorama Ventures assets are managed by extremely talented people who together will forge a successful global footprint and leverage the financial and commercial skills of Indorama to create shareholder value.

The acquisition will provide unprecedented entry into global niche markets and industries serving consumer’s daily needs with a sustained growth rate of ~5%. These products are used in home & personal care consumer goods, such as detergents, cleansers, shampoo, furniture applications, automotive parts fuels and lubricants. IVL has significant understanding of some of these end markets through its Fibers and PET businesses. New and exciting businesses include agrochemicals such as herbicides and unsaturated polyester resins for coatings, particularly in marine use.

IVL is committed to extracting further synergies and opportunities, such as supply chain and procurement consolidation as well as lowering corporate overheads and SG&A. These synergy benefits will further boost EBITDA contribution by USD 40M by 2021. Additional capex planned for the high value-added surfactants business will add incremental EBITDA of USD60M by 2022.

The transaction is funded by IVL’s internal cash flows and debt financing only and does not necessitate any equity dilution.

Mr. Aloke Lohia, Group CEO of Indorama Ventures, said, "I am excited to conclude this momentous deal with Peter Huntsman, a remarkable businessman, which will keep us both ahead of the curve and enhances our leadership in our chosen industries. I see this as IVL’s most strategic and ambitious deal as we set our goals and aspirations at the turn of this decade and as we groom ourselves into a global, diversified chemicals company with multiple integrated, and related earning streams.

“I would like to heartily welcome our new colleagues to the IVL family and I am confident that together we will drive this important business to generate significant value for all our stakeholders, reduce earnings volatility, and underpin IVL’s earnings growth opportunities for years to come."

As MRC wrote before, in May 2019, IVL announced that its indirect subsidiary Indorama Ventures Olefins in Westlake, LA, a manufacturer of Ethylene from Ethane with an annual capacity of 440,000 MT, achieved mechanical completion and was undergoing trial runs. IVOL then stabilized the production of on-spec ethylene and its byproducts at 5 of its 7 furnaces and ramped up gradually during the course of 2Q19. This project is the most ambitious project of its kind in IVL history and creates an exciting new platform of growth as well as affording stability and supply chain advantages to the EO/EG business by its pipeline integration. At normalized production, IVL will secure ~75% ethylene for internal consumption for EO/EG production and merchant the remaining output.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Indorama Ventures Public Company Limited, listed in Thailand, is one of the world's leading petrochemicals producers, a global manufacturing footprint with 59 sites in 20 countries across Africa, Asia, Europe and North America. The company's portfolio is comprises necessities and high value-added (HVA) categories of polymers, fibers, and packaging. Indorama Ventures has approx. 15,000 employees worldwide and consolidated revenue of USD 8.4 billion in 2017. The company is listed in the Dow Jones Sustainability Index (DJSI).

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2017 revenues of more than USD8 billion. Its chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. The company operate more than 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within its four distinct business divisions.
MRC

MOSCOW (MRC) -- Tosoh Quartz Corporation, a group company of Tosoh Corporation that is headquartered in Tokyo, Japan, will establish a subsidiary corporation and a quartzware production facility in South Korea, said the company.

It plans to have the subsidiary corporation established before the end of fiscal year 2020, and to start production at the production facility within fiscal 2021.

Tosoh Quartz Corporation will make a capital investment in South Korea as the nation plays a major role in the growing demand for semiconductors. The South Korea-based quartzware production facility will join its sister companies in Japan and Taiwan to further strengthen the company’s quartzware manufacturing capabilities. It will feature world-class technologies and will continue to expand on the expertise accumulated through the company’s operations in Japan and Taiwan to respond to the rising global demand for quartzware.

The global semiconductor and quartzware markets are forecast to expand. The forecast anticipates growing demand for semiconductors for increased smartphone data capacity, for Internet of Things (IoT) devices, for artificial intelligence (AI) uses, and for a rising number of automotive applications spurred by the advancement of electric vehicle and autonomous driving technologies. Tosoh Quartz Corporation’s implementation of its plans in South Korea will ensure that the Tosoh Group keeps pace with this rapidly expanding demand. The company’s Korean operations will also boost the profitability of Tosoh’s advanced materials businesses.

As MRC reported previously, Tosoh Corp restarted its 527,000 tpa naphtha cracker in Yokkaichi, central Japan, after planned maintenance in mid-April, 2016. The cracker was shut on 8 March, 2016. The company also conducted an unscheduled turnaround at this cracker from 20 to 26 February, 2019.

The company runs two low-density polyethylene (LDPE) lines with a combined production capacity of 56,000 mt/year and a 43,000 mt/year LDPE/ ethyl vinyl acetate (EVA) swing plant at the same site. It also runs 120,000 mt/year high density polyethylene (HDPE) plant.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh's petrochemical operations supply ethylene, polymers, and polyethylene.
MRC

MOSCOW (MRC) -- France's CGT union said on Friday it would continue a strike over the government's planned pension reform at refineries and petrol depots until 16 January, extending by almost a week a four-day action that started on 7 January, reported Reuters.

The decision comes the day after new nationwide protest marches that failed to break the stalemate between government and unions after a more-than month-old public sector strike.

The action at refineries aims to cause shortages at petrol stations, which has not occurred yet, according to authorities.

As MRC informed before, French oil major Total said earlier that strikes against the government’s pension reform were having no impact on its fuel supply and distribution ahead of a four-day nationwide strike in French oil refineries.

We also remind that in November 2019, Total disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

MOSCOW (MRC) -- Spanish energy giant Repsol plans to buy and sell more assets in a drive to get stronger in a smaller number of markets, after weak energy prices prompted it to cut capital spending and core profits forecasts, reported Reuters with reference to its CEO's statement.

CEO Josu Jon Imaz said the company now expected capital spending (capex) for 2018-2020 to be EUR12.5-13.5 billion (USD13.9-15.0 billion), including EUR500 million on renewable energy assets. That is down from EUR15 billion previously.

"Our geographical scope is not the right one," Imaz said, "We have to reduce the scope of the countries where we operate, and become more active in M&A."

He said the company would reduce its presence in the countries where it is smallest, without giving details.

Though weak energy prices dragged down Repsol’s third quarter adjusted net profit, it still beat market expectations thanks to downstream businesses such as refining and marketing.

Repsol trimmed its 2019 core earnings forecast to EUR7.5 billion from EUR7.8 billion previously, and also lowered its production forecasts for 2019 and 2020.

In 2019, the company planned to produce 710,000 barrels per day (bpd), down from 720,000 previously. It expects to be somewhere between 720,000 and 750,000 bpd next year.

"We will prioritize price versus production," Imaz said.

As MRC wrote previously, in the last week of September 2019, Spain’s Repsol resumed operations at its cracker in Sines, Portugal. The news was not directly confirmed by the company while it was not clear as of the time of press whether or not Repsol lifted a force majeure at the site. The company had declared the force majeure on the output from its cracker due to a technical glitch in early September. The cracker has a production capacity of 410,000 tons/year of ethylene and 215,000 tons/year of propylene. The company also owns a butadiene unit with a production capacity of 45,000 tons/year at the same site.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC

MOSCOW (MRC) -- Borealis AG and NOVA Chemicals Corporation has announced they have reached an agreement for Borealis to buy NOVA Chemicals’ 50% ownership interest in Novealis Holdings LLC (Novealis), as per Borealis' press release.

Formed in 2018, Novealis is the joint venture between affiliates of Borealis and NOVA Chemicals, which subsequently formed a 50/50 joint venture with an affiliate of Total S.A. to launch Bayport Polymers LLC (Baystar) in Houston, Texas, US.

Closing of the acquisition is subject to customary regulatory approvals and other conditions but is not subject to any financing condition.

The parties expect the transaction to close in the first half of 2020.

As MRC informed earlier, on 9 September 2019, Borealis held the groundbreaking ceremony for its new, world-scale propane dehydrogenation (PDH) plant. Located at the existing Borealis production site in Kallo, Belgium, the new facility has a targeted production capacity of 750,000 metric tonnes per year of propylene, making it one of the largest and most efficient plants of its kind in the world. With a total of around EUR 1 billion invested in the course of the project, the investment is the largest ever made by Borealis in Europe. It underscores the company’s commitment to its operations on the continent, and to being the supplier of choice to its European customers.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, the PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.

NOVA Chemicals Corporation is a plastics and chemical company headquartered in Calgary, Alberta, Canada, and is a wholly owned subsidiary of the International Petroleum Investment Company (IPIC) of the Emirate of Abu Dhabi, United Arab Emirates.
MRC