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SIBUR value is over USD20 bln as part of the merger with TAIF

April 27/2021

MOSCOW (MRC) -- SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, has been valued at more than USD20 billion as part of a deal to merge the petrochemical business with TAIF, a source close to the company told Interfax.

"In the interests of the transaction, SIBUR's assessment  was formed on a principle similar to that how companies are estimated for an IPO, it exceeds USD20 billion," he said.

Commenting on the possibility of a future IPO of the merged company, Interfax's interlocutor noted that "the creation of the merged company imposes objective technical limitations."

"The preparation of corporate documentation, the presence of which is mandatory in case of a decision on the initial offering, will take time after the closing of the deal. In addition, it will take time to show the market the merged company with all its advantages," he emphasized.

The SIBUR's representative emphasized that "the decision on SIBUR's IPO and possible placement dates is the prerogative of the shareholders."

The company also emphasizes that "in general, this is not a cash transaction, but the creation of a merged company."

"The list of the assets will be determined after the adoption of the relevant corporate decisions and given the approval of the regulators," SIBUR also noted.

The main petrochemical assets of TAIF are Nizhnekamskneftekhim, one of the world's largest producers of synthetic rubbers, and Kazanorgsintez, a large producer of polyethylene (PE) in the Russian Federation.

As reported earlier, SIBUR and TAIF expect their merger to increase the stability of the common business and its competitiveness in the global market. The combined company will receive a large-scale synergistic effect due to diversification of the raw material base, optimization of distribution and logistics, development of the R&D block, as well as increasing the operational efficiency of the assets.

After the completion of all investment projects underway, SIBUR will become one of the five global leaders in the production of polyolefins and rubbers after the merger. The merger of businesses will make it possible to efficiently distribute the raw material flows required for full capacity utilisation and further development of the petrochemical cluster in Tatarstan.

It was also reported that in 2020, SIBUR raised its sales of polypropylene (PP) and PE on the back of higher capacity utilization at ZapSibNeftekhim's complex. This led to an increase in the company's revenue in the olefins and polyolefins segment by 77.1% to Rb187.3 bln. This growth was mainly caused by higher PP and PE sales as a result of increased utilisation at ZapSibNeftekhim's complex and was partially offset by lower prices for these products.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 356,370 tonnes in the first two months of 2021, down by 9% year on year. Shipments of only low density polyethylene (LDPE) increased. PP deliveries to the Russian market was 246,870 tonnes in the first two months of 2021, up by 30% year on year. Shipments of propylene homopolymer (homopolymer PP) and block copolymers of propylene (PP block copolymer) increased.

SIBUR is Russia's largest vertically integrated gas processing and petrochemical company, which units a number of production sites in various regions of the Russian Federation. The company sells products to consumers in the fuel and energy complex, automotive, construction, consumer goods, chemical and other industries in more than 80 countries around the world.

PSC "TAIF" was established in 1995 and is the parent company of the group with the same name, which includes enterprises structured in four business areas: oil and gas processing, chemistry and petrochemistry (energy); investment and financial services; building; telecommunications and complex services, including trade. TAIF Group of Companies is a large Russian holding that controls 96% of the chemical, petrochemical and oil and gas processing industries in Tatarstan. The most important of its areas is the Chemical, Petrochemical and Oil and Gas Processing Divisions, which include the leading Russian polymer producers Nizhnekamskneftekhim and Kazanorgsintez.
Author:Margaret Volkova
Tags:PP, PE, PP block copolymer, homopolymer PP, LDPE, petrochemistry, Nizhnekamskneftekhim, Sibur Holding, Taif, Kazan, ZapSibNeftekhim, Kazanorgsintez, Russia.
Category:General News
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