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Business deals

Thailand's Indorama buys Huntsman chemicals unit for $2.1bn

CEO says shopping spree will continue as company diversifies

Indorama Ventures expects to complete the acquisition of Huntsman's units by the last quarter of this year. (Photo by Yumi Kotani)

BANGKOK -- Thai petrochemical company Indorama Ventures is buying the chemical intermediate and surfactant businesses of Texas-based Huntsman for $2.1 billion.

Indorama Ventures will acquire plants in India and Australia as well as in the U.S. The acquisition will make Indorama a large producer of integrated oxides and specialty chemicals that are used as raw materials for disinfectants, detergents, surfactants and other organic chemicals.

The acquisition announced on Thursday is part of the company's merger and acquisition strategy in a bid to become a global, diversified chemical company with multiple sources of revenue. The deal with Huntsman is expected to be completed within the October to December quarter.

The company wants to expand production and diversify its business through "a combination of greenfield, brownfield and M&A," Aloke Lohia, group CEO of Indorama Ventures, told the Nikkei Asian Review in a telephone interview after the announcement.

"We plan 25% brownfield and greenfield and 75% is M&A," said Lohia, signaling his company will continue to buy more aggressively over the next few years.

The acquisition of the Huntsman units will be funded by internal cash flow and debt, the company said in a statement. It also said the deal would not dilute equity holdings.

The announcement of the acquisition came just one week after Indorama sealed another deal to acquire fully Italy-based Sinterama and its subsidiaries, making Indorama the owner of five production sites in four countries including Brazil, China and Bulgaria.

Through the deal, Indorama added a combined capacity of around 30,000 tons per year of specialty polyester, which is used to produce products ranging from chips to a vast range of colored polyester yarns for automotive, furnishing, apparel and technical applications.

Early this year, Indorama also acquired Nigeria-based Bevpak, one of the largest manufacturers in West Africa of purified terephthalic acid, which is used in hygienic bottles and packages, with a production capacity of 18,000 tons a year.

As a result of multiple acquisitions, the company continues to grow in size. Its consolidated total asset has grown nearly fivefold to 379 billion baht ($12.3 billion) in eight years. The company posted annual revenue of 351 billion baht in 2018, more than triple from 2010. Its net profit increased 2.5-folds to 26.4 billion baht in the same period. 

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