LSB stock could fall on Interquisa deal - analysts

21 December 2007 10:06  [Source: ICIS news]

MADRID (ICIS news)--La Seda de Barcelona's acquisition of Spanish purified terephthalic acid (PTA) producer Interquisa from larger petrochemicals compatriot Cepsa could dilute LSB´s near-term market value, analysts said late on Thursday.

After months of negotiations, LSB said it will pay €595m for Interquisa, subject to shareholder and regulatory approval. It will finance €217.5m ($855m) of the deal by selling 12-15% of its shareholding to Cepsa.

The remainder of the acquisition will be funded through a €500m share offering, LSB said in a regulatory statement.

The deal boosts Barcelona-based LSB´s leadership in Europe´s PTA market and provide iso-propanol (IPA) supply synergies for the group.

Interquisa has a 580,000 tonne/year PTA factory and an 80,000 tonne/year IPA plant in San Roque near Cadiz. It also holds a 51% stake in Interquisa Canada, which runs a 520,000 tonne/year PTA production complex in Montreal.

“The operation is part of LSB´s vertical integration in the polyethylene terephthalate (PET) value chain,” LSB said.

Interquisa´s San Roque factory is located next to LSB subsidiary Artenius´ PET unit.

“The integration of PTA, IPA and PET will provide important synergies,” LSB added.

The market took a sceptical view toward the deal, sending LSB´s shares down over 8% on Wednesday and prompting stock market watchdog CNMV to halt trading.

Moreover, LSB´s €500m equity offering for 23% of its business was larger than expected and was consequently likely to dilute the company´s short-term stock value, analysts said.

Spanish brokerage Renta 4 said LSB will have to offer an attractive price for its shares in the offering to avoid a further dilution in its stock value. LSB must quickly integrate a slew of recent acquisitions and prove their synergies to boost shareholder confidence, it added.

Other analysts said Interquisa´s high debt levels could also cause problems. Shares were trading marginally up at €1.76.

($1 = €0.70)

By: Ivan Castano Freeman
+44 20 8652 3214

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 3 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly