Treofan targets emerging markets, talks continue for Indian BOPP maker

07 February 2013 17:26  [Source: ICIS news]

LONDON (ICIS)--Treofan is to ramp up its focus on emerging markets as part of a new strategy to develop the business, the Germany-based bi-axially oriented polypropylene (BOPP) film manufacturer said on Thursday.

The company is currently weighing up the potential of all emerging markets, as well as mature markets such as Japan, where the company does not have a strong presence. Immediate priorities are the Indian, eastern European, Brazilian and the Asia Pacific regions.

According to Vanacker, Treofan will pursue joint ventures and cooperative arrangements with local players, and consider the potential for acquisitions. However, the company is more likely to pursue a straight joint venture route in China and Latin America, whereas full acquisitions are more likely in eastern Europe and India.

The company – which is the largest BOPP producer in Europe and the third-largest in North America – currently derives around 40% of its turnover from outside Europe.

“[We are] looking at emerging markets with different eyes than we maybe have in the past. We are already one of the top three global BOPP manufacturers, but in South America, Asia Pacific and Africa, we are not really doing anything with innovation,” Vanacker said.

The company signed a non-binding agreement in September 2012 to acquire Indian producer Max Specialty Films, the BOPP subsidiary of conglomerate Max India. However, negotiations between Treofan and the company’s current owners are ongoing, and the deal may not close until near the end of this year, according to Vanacker.

He said: “We are still negotiating. We made a non-binding offer in September, and now we have the discussions and negotiations to bring the deal to a binding point.

“By experience, reaching out to an emerging market, that always takes a little longer than to make an acquisition in a mature market, so I would say this should be finalised in 10-12 months, by the end of 2013, if we are successful,” he added.

India is one of the fastest-growing markets for BOPP, with consumption in the country likely to have grown by 14-15% between April 2012 and March 2013. Growth is more sluggish in the west, but overcapacity has been a more significant issue for the industry, according to Vanacker.

He said: “Growth was not the issue for the BOPP films business, also not in the mature markets. What is and has been an issue for the BOPP film industry has been the irrational investment in additional capacities without looking at supply and demand and considering if demand growth is adequate in the marketplace to fill such expansion.”

The company is also looking to expand beyond its key sector of packaging films into technical films and separator technologies, Vanacker added.

By: Tom Brown
+44 208 652 3214

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