Ultrapar to focus on fuels, infrastructure after $1.3bn Oxiteno sale

Author: Al Greenwood

2021/08/16

HOUSTON (ICIS)--Ultrapar plans to focus on its infrastructure and fuel businesses following its $1.3bn deal to sell its surfactants business, Oxiteno, capping a string of divestments made by the company, the Brazilian conglomerate said on Monday.

Ultrapar is selling Oxiteno to Indorama Ventures, a Thai producer of polyester, glycols and surfactants. The deal will complement the surfactants business that Indorama bought from Huntsman, while further increasing the company's presence in the Americas.

The deal should close in Q1 2022, Indorama said.

Oxiteno follows two other divestments by Ultrapar. Earlier this year, it agreed to sell its pharmaceutical chain, Extrafarma, to Pague Menos for reais (R) 700m ($133m).

Ultrapar reported a Q2 impairment of R395m related to Extrafarma.

Ultrapar also signed an agreement to sell its 50% stake in ConectCar for R165m.

These three deals mark the end of Ultrapar's divestments, the company said. It will now focus on developing its energy and infrastructure business.

The largest of these is Ipiranga, a fuel retailer and distributor.

Ultrapar is in talks to acquire Alberto Pasqualini Refinery (REFAP) in the southern state of Rio Grande do Sul in Brazil. REFAP can process 201,000 bbl/day of crude.

If Ultrapar and Petrobras go through with the deal, it would be the company's first refinery. The two companies could reach a deal at the end of October. If it goes through with the refinery deal, Ultrapar said it could make payment in the second half of 2022.

Ipiranga also operates storage facilities. It expects to start up such facilities in Cabedelo, Paraiba state; Fortaleza, Ceara state, and Miritituba, Para state, in 2021-2022.

Ultrapar's terminal business, Ultracargo, won a concession's auction for a 20-year lease of the IQI13 area in Itaqui port, in the northern Brazilian state of Maranhao.

A new terminal will be built in IQI13 that can store at least 79,000cbm of bulk liquids, mainly fuel. Ultrapar expects the investment will be worth R310m. Operations should start five years after signing the contract.

Ultracargo already operates an existing terminal at Itaqui. Ultracargo recently expanded its capacity to 155,000cbm from 109,000cbm.

In the fourth quarter of 2021, Ultracargo expects to start up 110,000cbm of storage at the Vila do Conde terminal in the northern state of Para.

Ultrapar's gas business, Ultragaz, should start up storage facilities in Fortaleza and Belem, Para state, at the end of 2021.

INDORAMA
For Indorama, the Oxiteno deal will further expand the company's presence in the western hemisphere, as well as in glycols, ethylene oxide (EO) and surfactants.

Indorama entered the region's surfactants business in 2020, when it completed a $2bn acquisition of several Huntsman plants in Port Neches, Chocolate Bayou and Dayton in Texas, as well as Ankleshwar, India, and Botany, Australia. The plants in the US produced EO, ethylene glycol (EG) and propylene oxide (PO), as well as ethanolamines and linear alkyl benzene (LAB).

With Oxiteno, Indorama said it will become the largest nonionic producer of surfactants in the Americas.

Oxiteno will also provide Indorama access to renewable feedstock. It relies on vegetable oils to produce the raw materials for its surfactants.

Oxiteno's plants in Brazil have access to that nation's renewable ethylene, which is made from dehydrating the ethanol produced from sugarcane.

Oxiteno's monoethylene glycol (MEG) can also be used by Indorama's plants that produce polyethylene terephthalate (PET).

The following chart shows the product slate of the combination of Indorama and Oxiteno.

Source: Indorama

The acquisition of Oxiteno would cap a multiyear string of acquisitions on the part of Indorama that built up its presence in the Americas.

Thumbnail image shows bubbles, which are often created by surfactants. Image by Shutterstock

($1 = R5.25)