27 July 2011 23:04 [Source: ICIS news]
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HOUSTON (ICIS)--US-based Dow Chemical's polypropylene (PP) deal with Braskem does not include its PP licensing and catalyst business, the company said on Wednesday.
Dow had intended to sell the PP catalyst business separately from the plants, sources in the financial community said.
As it turns out, US-based catalyst producer WR Grace has been in talks about making an acquisition from an undisclosed seller.
On Monday, a court permitted WR Grace to participate in the bidding for the business.
In a statement, WR Grace said it does not comment on any pending acquisitions, and it does not confirm any acquisition targets.
Included in the sale are two PP plants in the US and two in Germany, with a total capacity of more than 1m tonnes/year, Braskem said.
The plants in the US are in Texas at Freeport and Seadrift, and will increase Braskem's PP capacity in the region by 50% to 1.4m tonnes/year.
The two plants in Germany, at the petrochemical complexes of Wesseling and Schkopau, have a capacity of 544,000 tonnes/year.
Also included are inventory, business know-how, certain product and process technology and customer contracts and lists.
Its PP capacity in the US would rise to 1.425m tonnes/year, placing it above LyondellBasell as the nation's largest PP producer, Braskem said.
The transaction is expected to close by the third quarter 2011 pending regulatory approvals.
Once the deal closes, about 200 employees are expected to transfer to Braskem, Dow said.
Under the terms of the deal, Braskem will honour customer and supplier contracts as well as other related agreements, Dow said.
In a statement, Dow CEO Andrew Liveris said, “This divestiture is yet another strong example of Dow’s disciplined and ongoing approach to portfolio management and is directly aligned with our strategy to transform our performance plastics franchise to focus on downstream, technology-differentiated solutions".
Liveris added: “This business has delivered historic margins that do not meet our expectations moving forward and is no longer core to Dow’s strategy. We are shifting our plastics portfolio from a commodity focus to that of a performance focus."
In a statement, Braskem CEO Carlos Fadigas said, "The acquisition of Dow's assets consolidates our leadership in polypropylene in the US, the largest thermoplastic resins market, and it also enhances our current position in Europe, an important market for our biopolymers strategy."
He added: "In addition, as our second acquisition in the US, this transaction will enable Braskem to capture approximately $140m in synergies [net present value] through a more diversified portfolio, a more leveraged fixed cost base and working capital, logistics and supply optimisation."
Braskem already owns PP plants in the US through its acquistion of Sunoco's PP business in 2010.
Additional reporting by Brian Ford and Joseph Chang
($1 = €0.69)
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