27 July 2011 16:12 [Source: ICIS news]
(Adds updates thoughout)
NEW YORK (ICIS)--US-based Dow Chemical has agreed to sell its global polypropylene (PP) business to an unnamed strategic buyer for $340m (€235m), its chief executive said on Wednesday.
The price represents a multiple of 6.7 times earnings before interest, taxes, depreciation and amortisation (EBITDA), said chairman, president and CEO Andrew Liveris.
“This is yet another step along the line of putting our precious inputs, propylene in this case, into value-add outputs,” Liveris said.
“You can assume that by doing this deal we are liberating ourselves to do that, so that leads you to the logical conclusion that we are taking what we make into our value-add high end uses like acrylics, epichlorohydrin and propylene oxide, and we are lowering our buy."
He added, “We are lowering our [propylene] buy. By the time our second PDH [propane dehydrogenation] unit comes on line, we will be 100% captive,” he added.
The company is also considering a second propylene plant with a possible start-up in 2018.
Braskem is the likely buyer, sources in the financial community speculate.
In April, Brazil-based petrochemical and polymers firm Braskem CEO Carlos Fadigas said it aims to expand its presence in the US polymers market through acquisitions.
“In the US, we have a broader focus to grow our presence - not just looking at PP [polypropylene], but PE [polyethylene] and PVC [polyvinyl chloride]. We are interested in the US market for these three resins,” said Fadigas at a media event at the New York Stock Exchange.
Meanwhile, Dow is selling its PP catalysts business separately, according to sources in the financial community.
In June, US-based specialty chemicals and catalysts firm W.R Grace made a bankruptcy court filing to make what it called a strategic acquisition.
The deal could significantly improve the company’s business plan and growth strategy in the upcoming years, Grace said. The company did not provide other details about the possible acquisition.
On Monday, the court permitted WR Grace to participate in the bidding.
Dow’s PP plants include a 195,000 tonne/year facility in Cologne, Germany; a 250,000 tonne/year Schkopau unit in Germany; its 135,000 tonne/year Seadrift plant in Texas, US, and its 250,000 tonne/year Freeport, Texas, facility in the US
Additional reporting by Al Greenwood in Houston
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