US Old World to keep consumer unit after EO/EG sale to Indorama

07 February 2012 22:50  [Source: ICIS news]

US Old World to keep consumer unit after EO/EG sale to IndoramaHOUSTON (ICIS)--US-based Old World Industries will continue to produce several of its product lines through its consumer-products division, following the sale of its chemicals business to Indorama, the company said on Tuesday.

Old World agreed to sell its chemical business to Thailand’s Indorama Ventures for $795m (€604m). The deal should close later in the quarter, Indorama said in a regulatory filing.

The transaction includes Old World’s ethylene oxide (EO) and monoethylene glycol (MEG) operations in Clear Lake, Texas, which Indorama said was the largest single EO/EG plant in the US.

According to Indorama, the site has a crude EO capacity of 960m lb/year (435,000 tonnes/year); a purified EO capacity of 450m lb/year (204,000 tonnes/year); and an MEG capacity of 790m lb/year (358,000 tonnes/year).

However, Old World puts the plant's MEG capacity at 620m lb/year (281,000 tonnes/year).

An MEG seller said the deal could have a big effect in the market.

"It will likely represent a major change in the US market," the seller said. "Perhaps not immediately, but over a year or two."

Under the terms of the deal, Old World will enter into a long-term glycol supply contract with Indorama for its antifreeze production in the US.

All of Old World's consumer product lines, including its PEAK anti-freeze and other products, will continue to be part of Old World with no changes in personnel or structure, the company said.

“The announcement is a strategic move that will allow Old World to focus all of its time and resources on expanding the PEAK family of products in the automotive and heavy-duty marketplaces worldwide,” said Tom Hurvis, the chief executive of Old World Industries.

The Old World purchase will also provide synergies and operational efficiencies to the company's existing operations of polyethylene terephthalate (PET) polymers and polyester fibres and yarns in North America, it added.

Indorama had acquired two North American PET plants from Invista.

Earlier this year, Indorama closed on the acquisition of fibre producer Fibervisions.

($1 = €0.76)

Additional reporting by Nurluqman Suratman and Leela Landress

By: Bobbie Clark
+1 713 525 2653

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