Braskem closes the acquisition of rival Solvay Indupa for $ 290 million

After nearly a year of negotiations, Braskem won the dispute with foreign groups and announced yesterday the acquisition of Solvay Indupa, competitor in the PVC market. The operation, valued at $ 290 million, makes the Brazilian petrochemical the fourth largest PVC manufacturer in the Americas-and only national manufacturer of resin-, and marks the Group's entry in the Argentinean market.
Since 2010, when he announced the incorporation of Quattor, Braskem also lacks Brazilian competitors in the markets of polypropylene and polyethylene.
When buying the rival, whose annual sales are estimated at about $ 750 million, the Brazilian petrochemical must attain the mark of $ 40 billion in annual revenue. The operation, however, still depends on the approval of the Administrative Council for economic Defense (Cade) and Argentine regulatory authorities.
The Board of Braskem avoided making projections of when the transaction will be able to receive the endorsement of the Cade, but showed optimism about approval. "Is established in Brazil that the resin market is a global market," said the President of Braskem, Carlos Fatigues, reproducing understanding of Cade in the process of analysis of Quattor's purchase. Even after the acquisition of Solvay, Braskem will have a market share of just 2% in global industry of PVC, according to Fatigues.
Locally, however, the operation is relevant. The installed capacity of Braskem PVC will be expanded to 710 thousand to 1.250 million tons a year, almost half the South American market. The acquisition of Solvay Indupa also represents the Braskem's ticket in the Argentinean market, as well as the possibility of producing PVC in the Southeast region, Brazil's main consumer market. Braskem operated until then, PVC factories in Alagoas and Bahia.
The proximity to the southeastern market justifies the Braskem's intention to promote a broadening of Solvay Indupa factory located in Santo André. The expansion would be 50 thousand tons a year, or 15% of the current factory, but does not yet have a date for the expansion occurs.
Acquisition. The amount of $ 290 million considers, in addition to the assumption of debts of Solvay Indupa, Braskem's intention to carry out a takeover bid (OPA) of the shares representing 29.41% of the capital stock of Solvay Indupa. The agreement involves only 70.59% of Solvay Indupa detained by Solvay Argentina, a company of the Solvay Group. The transaction is valued at about $ 200 million, with the remainder destined for future public offering.
The operation should not cause changes in the level of indebtedness of Braskem, second Vice President financial and investor relations officer Mario Augusto da Silva. "(The acquisition) will have a very small portion of the box. So, from the point of view of leverage, she is neutral, "he said.
In a statement released last night, the Solvay Group clarified that the sale will yield only $ 25 million to the company's box. "The amount of the resulting box for Solvay's share will be $ 25 million (18 million euros). Disinvestment should generate a net loss (non-cash) of about 120 million euros in the actions of the Solvay Group, "said the European Group.
Complete the agreement, the number of factories operated by Braskem will jump from 36 to 40 units, of which 31 factories in Brazil and nine overseas (Argentina, United States and Germany). The installed capacity of production of thermoplastic resins of Braskem, category in which are included the PVC, polyethylene and polypropylene, will grow 7% after the incorporation of Solvay, 7.68 million to 8.22 million tons per year, thereby enhancing the condition of a leader in the production of thermoplastic resins achieved by Braskem since started its internationalization movement.
Created in August of 2002, Braskem gave his first international step in 2010, when it acquired assets of Sunoco Chemicals in the United States, days after the announcement of Quattor's purchase. The following year, the Brazilian petrochemical announced the purchase of assets of Dow Chemical in the United States and in Germany, and it became the largest manufacturer of polypropylene in the North American market.