Indorama's quest to become a global PET giant has received a further boost with the company entering into an asset purchase agreement with Fortune 500-listed Eastman Chemical Company.
The acquisition of Eastman's European PTA and PET resin assets is being accomplished through Indorama's Thai affiliates – Indorama Holdings (IRH) and Indorama Polymers (IRP) – and is likely to cost Euro 226 million (about $330 million), subject to adjustments in Eastman's working capital.
Talking exclusively with the Hindustan Times, Indorama sources in Thailand said that the boards of directors of the two affiliates have already approved the acquisition and the transaction is expected to close during the first quarter of 2008.
It may be noted that IRH and IRP recently approved the acquisition of Eastman' PTA and PET assets, respectively, as these assets are complementary to their business. Eastman, whose 2006 sales stood at $7.5 billion, is a leading PET producer in Europe with an integrated manufacturing capacity in Rotterdam, Holland and a PET resin manufacturing capacity in Workington, UK. The combined capacity of the two locations is about 340,000 tonne per annum of PTA and 350,000 tpa of PET resin.
The acquisition, when consummated, would be the third international acquisition in the polyester sector by Indorama after the successful takeover of Siam Polyester, Thailand, in 1998 and StarPet Inc, USA, in 2003. Post this acquisition, Indorama Thailand would consolidate its position further among the world's largest polyester manufacturers with 2 million tonne capacity, a 20 per cent increase from its the current capacity and an enhancement in revenue by around $1 billion. “The acquisition will help us become the second largest producer of PET polymers globally (after M&G, Italy),” said Ashok Jain, AVP finance and head of investor relations, Indorama Polymers.
Indorama is confident that this phase of consolidation in the European PET industry is the way to bring back returns in an otherwise lacklustre market. “The combination of Indorama and Eastman establishes a major producer in Europe with pan European presence, larger customer base, more product offerings and efficient plants,” said Aloke Lohia, group CEO, Indorama Thailand.