Indorama Ventures to acquire PET business in Brazil
Indorama Ventures Public Company Limited (IVL), a global chemical producer, has announced that it has entered into an agreement to acquire M&G Polimeros Brazil S.A. in Ipojuca Brazil. The plant is the largest PET facility in Brazil, with capacity of 550,000t/a. This plant is strategically located and benefits from virtual integration with a manufacturer of Purified Terephthalic Acid (PTA), a key feedstock to PET. The transaction is expected to be completed in second quarter 2018, subject to regulatory approvals.
This acquisition in Brazil is in line with the Company’s strategy to further extend its market position, and expand its global footprint in key markets with high growth potential. This strategic position is intended to allow Indorama Ventures to deliver products to key customers in Brazil and elsewhere in a cost-effective and efficient manner. Indorama Ventures is well positioned to service its current global client base and M&G’s existing customers once this acquisition is complete and the plant is fully operational. The Company expects immediate incremental revenues and cost synergies, driven by a substantial volume increase and potential value add through backward integration.
South America is an important emerging market with domestic demand for PET growing at around 5%. Today’s per capita consumption of PET is comparatively low at 2.8kg and has potential for growth. Brazil also has strong underlying fundamentals, supported by government policies to stimulate economic growth and strengthen the domestic market.
Indorama Ventures continues to be on a transformational journey aimed at accretive growth and sustainable value creation, while maintaining financial discipline. In its latest financial disclosure of 20 February 2018, the Company announced its record EBITDA of US$ 1 billion for 2017 which was a growth of 30% on a year-on-year basis. Significant improvement in the PET and feedstocks business environment also enabled its net profit to grow by 68% on a year-on-year basis. This acquisition will significantly advance IVL’s strategy in its Necessities business, where the Company aims to deepen its global footprint and build scale in key markets.
HSBC is serving as financial advisor, KPMG is serving as Finance and Tax due diligence advisors, and Mattos Filho & Lowenstein Sandler is serving as Legal advisors.
