Hungary's BorsodChem buys Poland's Blachownia

05 October 2005 12:14  [Source: ICIS news]

PRAGUE (ICIS news)--Hungary’s BorsodChem has agreed to buy Polish high-purity ethylbenzene (EB) maker Petrochemia Blachownia, a source at the Polish firm said on Wednesday.

The deal with Blachownia's parent company, the Ciech group, will be announced tomorrow by BorsodChem, the source added. BorsodChem confirmed that an announcement would be made but declined further comment.

As well as being Poland’s only producer of high-purity ethylbenzene, which accounts for roughly half of its total revenues, Kedzierzyn-Kozle based Blachownia sells benzene (26% of revenues) and toluene (7% of revenues). Sales of these products are mainly to BorsodChem and Poland’s Zaklady Azotowe Pulawy (ZAP).

K&H Equities in Budapest said that given a lack of detailed information about the company's assets and due to high earnings volatility of the past few years it was difficult to value Petrochemia Blachownia. However, in the light of ongoing investments it thought the acquisition price might at most be Zloty80m-120m (about $24m-36m/Euro20m-30m), despite a book value of just Zloty48m.

Benzene and toluene are the raw materials of methyl di-p-phenylene isocyanate (MDI) and toluene di-isocyanate (TDI), the most profitable products of BorsodChem. K&H Equities head of research Peter Tordai said current benzene capacity at Petrochemia Blachownia was 69,000 tonne/year while toluene capacity was 13,000 tonne/year. He said there were plans to increase capacity to 90,000 tonne/year and 21,000 tonne/year respectively by the third quarter of 2006. The firm also produces anhydrous ethanol, fuel blends, fuel components, solvents, solvent components, and coumarone-indene and styrene-indene resins.

Blachownia employs 200 people, and achieved a net profit of Zloty21m on Zloty296m of revenues in 2004. However, Tordai said rising raw material prices had left the company with very little net profit in the first half this year.

The Polish state holds 37% in the Ciech group. Ciech became the sole shareholder of Blachownia in 1999.

By: Will Conroy
+44 20 8652 3214

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