UpdateBasell/Lyondell creates top PE/PP player

17 July 2007 14:23  [Source: ICIS news]

(Updates, recasts story throughout)

 

By Nigel Davis

 

LONDON (ICIS news)--The Lyondell acquisition gives Basell significant upstream integration in the US and creates a combined number one global player in polypropylene, high density and low density polyethylene, industry analysts said on Tuesday.

 

The agreed $48 a share bid for Lyondell by Access Industries’ Basell, announced on Tuesday morning, values the US firm at $19bn (€14bn) including debt.

 

The combination creates a $34bn turnover (2006 estimate) player with significant assets in Europe and North America and a growing global presence.

 

Lyondell vies with Dow Chemical as one of the world’s leading two producers of propylene oxide (PO) and is a major US olefins and polyolefins maker.

 

The three Lyondell businesses: ethylene, co-products and derivatives; propylene oxide and related products; and refining, would complement and significantly strengthen Basell’s polyolefins business, the companies said in a statement.

 

“There is not a huge overlap in their businesses and Basell is widening its product range,” Matthew Thoelke, an olefins and styrenics consultant with CMAI told ICIS news.

 

“Basell does not have much of a presence in the US. [The transaction] turns Basell into more of a global player,” he added.

 

A combined company would be the world’s fifth largest producer of ethylene and number one in polypropylene (PP), high density polyethylene (HDPE) and low density polyethylene (LDPE), Thiele said.

 

It would be the second largest global producer of propylene oxide with capacities primarily in North America and western Europe.

 

Lyondell gives Basell considerable upstream integration in polypropylene and a broader rage of polyolefins and petrochemicals, Glyn Johnson, manager of Nexant Chem Systems' strategy and financial practice said.

 

The acquisition gives Basell access to more than 1m tonnes/year of propylene.

 

Lyondell’s Channelview naphtha cracker in Texas alone can produce 1m tonnes/year of the olefin alongside 1.75m tonnes/year of ethylene and 550,000 tonnes/year of C4s, he added.

 

Basell can produce 1.4m tonnes/year of PP from plants in the US, Canada and Mexico but it is only backward integrated to propylene in the Indelpro joint venture in Altamira, Mexico.

 

There, it has a 49% stake in a 240,000 tonne/year Spheripol PP plant and access to 150,000 tonne/year of propylene produced in a fluid catalytic cracker.

 

Basell is said to be the world's largest producer of PP and a major supplier of polyethylene PE and advanced polyolefin products. It also develops and licenses polyolefins processes and catalysts.

 

($1 = €0.73)

 

 

By: Nigel Davis
+44 20 8652 3214

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