Chandra Asri stake up for sale?

By Malini Hariharan

Indonesia’s sole cracker operator Chandra Asri faces yet another ownership change with Singapore’s Temasek Holding reported to be looking at divesting its stake in the company.

The news report in the Wall Street Journal said several companies from Thailand, South Korea and Japan have shown interest in Temasek’s stake, including Thailand’s PTT Chemical and Siam Cement and South Korea’s Honam Petrochemical Corp.

The Thai companies have yet to confirm their interest but a Honam source admitted that Chandra Asri is one among various foreign companies being studied for possible investment.

Acquisitions are an important part of Honam’s expansion strategy and company sources have in the past confirmed that opportunities are being studied.

Taking a stake in Chandra Asri makes sense as the cracker already provide some ethylene to its two polyethylene plants in Indonesia. These plants came to Honam via the Titan Chemical acquisition that it completed last year.

It would also strengthen Honam’s position in the Indonesian industry. Earlier this year, the chairman of the Lotte Group, parent company of Honam, had announced plans for new $3-5bn cracker project in the country.

But Honam is likely see competition from the Thai players. Speaking to a Thai newspaper the PTT Chem’s ceo did not confirm interest in Chandra Asri but acknowledged that Indonesia is an important target market.

In an interview to the blog earlier this year, PTT Chem’s ceo had said that the company was keen to expand its regional presence via acquisitions. It had last acquired a 50% stake in Cognis Oleochemicals in 2008.

Replacing a financial investor with an experienced petrochemical producer should help Chandra Asri quickly implement its expansion plans. It operates a 600,000 tonnes/year cracker at Cilegon. Downstream facilities include two PE plants, three polypropylene (PP) plants and two units for styrene mononer.

The company, which merged with Tripolyta in January this year, has announced plans for expanding the cracker to 1m tonnes/year and adding to its PE capacity. It also recently issued a contract for construction of a 100,000 tonnes/year butadiene plant.

Temasek had acquired a 50% share in the Chandra Asri back in 2006 from several shareholders, including trust fund Commerzbank International Trust Singapore. But it has since then diluted its stake to 22.9% and is said to be expecting $400m for this. The rest of Chandra Asri is in the hands of Barito Pacific.

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