HOUSTON (ICIS)--The approval process for Braskem’s $290m (€212m) acquisition of Solvay Indupa’s vinyls and chlor-alkali assets in Argentina and Brazil could take 3-12 months, sources in Brazil said on Friday.
Until then, nothing will change while the companies work independently as they have in the past, with no contact between the two, the sources said.
Response to Braskem’s signing of an agreement to acquire Solvay Indupa’s vinyls and chlor-alkali assets in Argentina and Brazil has been mixed.
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 approve the acquisition, the consequences of the deal will not be felt for a long while, the sources said.
Solvay Indupa has PVC plants in Brazil and in 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.
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 America's fourth largest PVC producer, it said.
Braskem said it is interested in expanding Solvay's Indupa PVC plant in Santo Andre, Sao Paulo.($1 = €0.73)