23 November 2011 13:36 [Source: ICIS news]
LONDON (ICIS)--Arkema plans to sell its vinyl business to Switzerland-based investment group Klesch so it can focus on its industrial chemicals and performance products segments, the French chemical major said on Wednesday.
Arkema said that its vinyl business is no longer profitable and that it will pay the Klesch Group €100m ($135m) to take over the business. It will also book exceptional net expenses of around €470m for the project.
The company said the project would allow it to concentrate its resources and investments on developing its industrial chemicals and performance products businesses.
“This project is based on our firm belief that our specialty activities require today a differentiated strategy for each of these activities,” said CEO Thierry Le Henaff.
"By refocusing on its specialty activities, namely Industrial Chemicals and Performance Products, Arkema would continue to implement its growth strategy in innovative solutions dedicated to sustainable development and in emerging economies," he added.
Klesch, an operator of industrial and commodity-related businesses, said that the acquisition will enable it to create a major player in the European polyvinyl chloride (PVC) industry, built around a portfolio of investments balanced between upstream and downstream activities.
“We are delighted to announce this agreement with Arkema to acquire its vinyl products division. This acquisition provides the Klesch Group with a new growth platform and one which complements its existing operations,” said Gary Klesch, founder of the Klesch Group.
“One of the key attractions of Arkema’s vinyl products business is the expertise of its management and the dedication of its staff. We look forward to working with them in the future,” he added.
The deal will mean 1,780 employees in France and 850 staff outside France will transfer to Klesch.
Investment bank JP Morgan Cazenove said that a key depressant on the valuation of Arkema since its 2006 spin-off from energy major Total has been its large vinyls division, with barely any profits and the constant threat of a move into losses.
"In our view, investors should be delighted that the much-maligned vinyls business is going, allowing Arkema to concentrate fully on growing its two core areas of Performance Chemicals and Performance Products," the bank added.
Earlier on Wednesday, Arkema suspended trading of its shares ahead of the announcement about its vinyl business.
The deal with Klesch is expected to close in mid-2012, it said.
Earlier in the year Klesch Group bought Shell’s 4.5m tonne/year German refinery in Heide.($1 = €0.74)
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