19 December 2013 22:58 [Source: ICIS news]
HOUSTON (ICIS)--Response to Brazil’s Braskem’s signing of an agreement to acquire vinyls and chlor-alkali assets in Argentina and Brazil from producer Solvay Indupa has been mixed, sources said on Thursday.
A source said only the name will change, but that the Solvay operations should remain essentially the same under Braskem.
Another industry participant said interest in cheaper resin imports could increase if PVC domestic prices rise when Solvay exits the regional market.
Still another said that the major effect of the announcement at this point is market uncertainty.
In any case, since Brazil’s anti-monopoly commission CADE needs to approves the acquisition, the consequences of the deal will not be felt for a long while, the sources said.
Braskem has signed an agreement to acquire vinyls and chlor-alkali producer Solvay Indupa from Solvay for $290m (€212m), the Brazil-based chemical major said. Solvay Indupa has PVC plants in Brazil and Argentina, with a total PVC capacity of 540,000 tonnes/year and a caustic soda capacity of 350,000 tonnes/year.
The deal establishes an industrial base in Argentina for Braskem, a country in which the company has had a commercial presence for more than 20 years. Moreover, it will increase Braskem's PVC capacity to 1.25m tonnes/year, the company said. Braskem's caustic soda capacity will rise to 890,000 tonnes/year.
Under the agreement, Braskem will acquire the 70.59% stake that Solvay owns in Solvay Indupa. Closing on the acquisition will depend on approval from Brazil's CADE, Braskem said. With the conclusion of the deal, Braskem will launch a public offering to the minority shareholders to buy the shares of Solvay Indupa on the Buenos Aires Stock Exchange. Once the deal is approved by Brazil and Argentina anti-monopoly agencies, Braskem may become the fourth largest PVC producer in the Americas, it said.
With the acquisition, Braskem increased the number of plants it operates from 36 to 40.
In addition, Braskem is interested in expanding Solvay's Indupa PVC plant in Santo Andre, Sao Paulo, Braskem said.
($1 = €0.73)
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