Petronas to buy Sweden’s Perstorp for €1.54bn

Tom Brown

17-May-2022

LONDON (ICIS)–Petronas has agreed to acquire Sweden-based firm Perstorp, the Malaysia state oil and gas company said on Tuesday, in a move set to further expand its specialty chemicals footprint.

Petronas has agreed to acquire the entire equity interest in Perstorp Holding AB for Malaysian ringgit (M$) 7.02bn (€1.54bn) from private equity firm PAI Partners, giving the firm an enterprise value of €2.3bn.

The deal is being carried out through its Petronas Chemicals Group (PCG) arm, which has stated a strategy to expand its basic chemicals portfolio and to diversify further into derivatives and specialties, with the Perstorp acquisition representing the creation of a specialty chemicals portfolio.

The acquisition is “a major milestone for PCG in establishing a key platform to diversify into the specialty chemical industry and capture new growth opportunities, whilst enabling us to future proof our business against market cyclicality and volatility” said PCG CEO Mohd Yusri Mohamed Yusof.

Petronas also acquired Netherlands-based silicones, lube oil additives and chemicals producer BRB Group in 2019.

Acquired by PAI Partners in 2006 and transferred from its IV fund to a new investment vehicle managed by the firm and counting Landmark Partners as a cornerstone investor in 2018, Perstorp focuses on the resins and coatings, engineering fluids and animal nutrition markets.

The company has dealt with “continued challenges” in recent years, according to chief Jans Secher, speaking when the company announced a loss for the fourth quarter of 2019, and has pursued a lengthy programme of cost-cutting measures, but has seen stronger financial growth since then.

Perstorp saw a downgrade to its credit rating in April 2020 by S&P Global Ratings due to the COVID-19 pandemic, to B- with a negative outlook, citing heavy exposure to cyclical end markets such as transportation, industrial and construction.

The agency upgraded the company’s outlook from negative to stable in December 2021, but maintained the B- rating.

Perstorp has since swung back to profit, recording record earnings before interest, taxes, depreciation and amortisation (EBITDA) in the fourth quarter of 2021 on the back of improved margins despite the energy price surge, and healthy demand.

The company reported a record in the first quarter with the highest EBITDA in its history at Swedish kroner (Skr) 845m (€81m).

PCG estimates that the purchase will add 28% incremental revenue based on 2021 results and add 2.3m tonnes/year to its production portfolio.

“By tapping into PCG’s strength and market leading position in the Asia Pacific region, we are confident that Perstorp can continue to develop into its next phase of growth,” said Secher.

($1 = M$4.39; €1 = SKr 10.44)

Thumbnail picture: Petronas Towers in Kuala Lumpur, Malaysia (Source: C F Tham/AP/Shutterstock)

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