InterviewCorrected: Reach drives Asian buyers to eye European chem assets

17 February 2011 20:02  [Source: ICIS news]

Correction: In the ICIS story headlined “Reach drives Asian buyers to eye European chem assets” dated 17 February 2011, please read in the sixth paragraph … PetroChina offered $1bn for a 50% stake in Switzerland-based INEOS Refining … instead of … Sinopec offered …. A corrected story follows.

By Joseph Chang

NEW YORK (ICIS)--China- and India-based chemical companies are actively seeking to acquire European chemical assets - part of a strategy to comply with Reach, an investment banker said on Thursday.

“Players from Asia want certain European chemical assets,” said Constantine Biller, director of the chemicals and industrial group at UK-based investment bank Clearwater Corporate Finance.

“The EU’s Reach legislation is having a big impact on non-Reach compliant Asian players that need some way of dealing with it – they can either go through a complex registration process or buy an asset in Europe that has the expertise that allows them to circumnavigate this,” he added.

Clearwater advised Ireland-based crop protection chemicals company AgriGuard on its sale to Japan-based Mitsui AgriScience International in August 2010 – a transaction where the Reach issue was a prominent feature.

There have been a number of recent deals involving Asian buyers of European chemical assets.

China National BlueStar agreed to acquire most of Norway-based silica products company Elkem for $2.0bn (€1.5bn). PetroChina offered $1bn for a 50% stake in Switzerland-based INEOS Refining – part of a broader deal with INEOS that also involves sharing petrochemical production technologies.

“Most of our sell-side activity sees bidders from this geography. They’re not winning all of them, but they are definitely present,” said Biller, whose firm focuses on mid-market deals in the $20m-$500m range.

China-based buyers have typically focused on larger assets with over $800m in revenues, noted the banker.

“But they’re starting to come down because a lot of smaller businesses also have the technology they’re looking for,” he added.

($1 = €0.74)

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By: Joseph Chang
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