Acquisition of Quattor will give Braskem regional boost - Moody’s

22 January 2010 20:23  [Source: ICIS news]

HOUSTON (ICIS news)--Braskem’s acquisition of Quattor should improve the Brazilian company’s operational diversity based on Quattor’s presence in the country’s most industrialised region, Moody’s Investors Service said on Friday.

The Quattor facilities acquired in the deal are in Rio de Janeiro and Sao Paulo in the country’s southeastern region, where 70% of domestic demand for thermoplastic resins is concentrated, Moody’s said.

While Braskem already serves the region from its current facilities, the deal should allow for optimisation of logistics and a reduction in freight expenses, Moody’s said.

On a broader level, the acquisition benefits Braskem by making it the largest petrochemical company in the Americas and Brazil’s sole polyolefins producer.

As a result, Moody’s affirmed Braskem’s credit ratings and maintained a stable outlook for the company.

“We believe that the company's strengthened market position in Brazil will translate into improved market discipline and lower volatility of its operating margin and cash flow,” Moody’s said.

Moody’s also noted that Braskem had a successful track record of incorporating new assets, adding that the integration risk involved in the Quattor acquisition was mitigated by Braskem’s knowledge of the Quattor’s technologies.

“We expect that the combination of the two companies will result in significant gains from synergies and operational improvements,” Moody’s said.

“In our view, immediate gains should be captured primarily from the improvement of Quattor’s commercial strategy, logistics and capacity optimisation,” the ratings service added.

Braskem’s liquidity should remain robust because of an equity injection into the company from state-run Petrobras and conglomerate Odebrecht, which should be used to retire Quattor’s debt, Moody’s said.

The Quattor acquisition is expected to add about $2bn (€1.42bn) in annual revenues to Braskem, the ratings service said.

($1 = €0.71)

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By: Ben DuBose
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