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Business

Indorama looks to buy European tire material producer

Thai company shifts gears as popularity of electric, self-driving cars expands

BANGKOK -- Expecting greater demand for lightweight tires, Thai petrochemical manufacturer Indorama Ventures has entered negotiations to purchase Glanzstoff, a leading European producer of raw materials for tires.

Glanzstoff posts yearly sales of $190 million and ranks second globally in rayon tire cords. The company has manufacturing centers in Luxembourg, Italy and the Czech Republic, mainly supplying materials to Europe's top tire manufacturers. Glanzstoff is building a factory in Qingdao in eastern China, set to open by March 2018. A purchase price is still under negotiation.

Indorama produces polyester fabrics and nylon fibers for high-performance tires via subsidiaries in Germany, the U.S. and China, but wants to improve its selection of goods and production capacity through the acquisition of Glanzstoff. The Thai petrochemical company thinks the popularity of electric vehicles and self-driving cars will spur the spread of lightweight tires.

The proposed purchase, the first major acquisition in a year for Indorama, fits the company's policy of shifting focus from general-purpose materials to high-performance ones. Indorama holds the world's largest market share in PET resin, used in making plastic bottles and other everyday products, but the company is increasing investment in advanced materials, which have higher margins. Expanding Indorama's tire-related business is part of that shift.

Indorama's automotive-related businesses, including material for air bags, logged sales of over $400 million in fiscal 2016, or approximately 15% of the company's total. The manufacturer anticipates that global demand for high-performance tires in luxury, electric and self-driving cars will grow 4-7% annually for the next five years through 2021.

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