01 December 2004 05:03 [Source: ICIS news]
LONDON (CNI)--Lyondell Chemical Wednesday completed the acquisition of Millennium Chemicals, creating ?xml:namespace>
Pro forma 2004 sales for the merged companies are expected to be close to $14.8bn (Euro11.1bn), up from $11.4bn in 2003. Post-merger stockmarket capitalisation is more than $6.5bn, up significantly from the $4bn expected at the time the deal was announced on 29 March 2004.
|Lyondell Pres. Dan Smith|
The emphasis for the expanded company, to be called Lyondell Chemical and headquartered in
If successful, Lyondell will achieve a debt to capital ratio of 45% and be placed to regain investment grade rating on its debt, DiNicola said. Lyondell has already repaid three lots of $100m of debt this year, as cash flow has been strong given the high operating rates across its asset base and double digit growth rates in demand for its products.
The purchase has been made on a stock-for-stock basis, with each Millennium shareholder getting 0.95 of a Lyondell share for each Millennium share they hold. Based on recent trading, the equity value of the deal is put at $1.6bn, plus the approx $1.1bn of Millennium debt.
DiNicola said he does not envisage any cuts, disposals or savings to be made now the purchase has been completed. "We will keep everything, as was our original intention," he said, adding that the new company has strong global positions in titanium dioxide (TiO2) and propylene oxide and derivatives, and a strong North American position in olefins and derivatives (polyethylene [PE], acetic acid and vinyl acetate monomer [VAM]) and aromatics.
The driver for the deal was the full consolidation of Equistar, of which Lyondell has previously tried to take full control by buying out Millennium’s holding, but without success. The company expects to benefit from economies of scale and the ability to instigate regional rather than site management of the asset base.
In the longer term, however, Lyondell will be looking at ways to tap into the higher growth rates in the Asian market and to exploit cheaper feedstocks, DiNicola said.
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