IVL to acquire Performance Fibers; adds on to auto portfolio

Thailand-headquartered PET integrated manufacturer Indorama Ventures (IVL) has reached a definitive agreement to acquire one of the world’s premium automotive fibre businesses, Performance Fibers Asia, including all its Asian manufacturing operations and the right to continue using the name Performance Fibers. IVL will make the acquisition from an affiliate of Sun Capital Partners, a private investment firm specialising in leveraged buyouts and investments in market-leading companies. Financial terms of the agreement were not disclosed.

Performance Fibers Asia is a producer of tyre fabrics in the region, with an output of 48,000 tonnes of polyester tyre cord yarn, and is the second largest production facility of its kind in China. Asia is the largest and fastest-growing market for tyres globally, accounting for more than 50% of global tyre demand in 2013 and expanding at 8% CAGR over the last five years.

This acquisition represents the continuation of IVL’s strategy to increase and strengthen its presence in the high value-added (HVA) automotive safety applications. Performance Fibers Asia brings together a broad and complementary portfolio of innovative products to IVL, following the acquisition over the last two years of PHP Fibers (acquired in February 2014), one of the world’s leading nylon 6.6 airbag yarn producer, and Trevira, a producer of high end polyester fibres and yarns for automotive interiors in Europe. The combined three businesses are expected to have annual revenue of at least US$850 million.

The Performance Fibers business in Europe and the Americas will continue to operate separately under the ownership of Sun Capital and the leadership of the existing management team in those regions.

The production facilities are strategically situated in the Pearl River Delta city of Kaiping, China, where IVL’s Guangdong facility is a supplier of speciality PET polymers, providing immediate synergies in the raw material supply chain and operational excellence.

Aloke Lohia, Indorama Ventures Vice Chairman/Group CEO commented, “This acquisition is a great strategic fit for IVL. We are acquiring a company that has an established premier position in the life-critical end-use applications in the tire industry across the world. The company has a proven management team with a track record of value creation, expanding the business at 17% CAGR over the last four years.”

He also added, “With the continued growth of China, India and all emerging nations, the industry growth outlook for tyres remains very attractive especially as radial tires’ importance is increasing for fuel efficiency and passenger comfort.”

The transaction closing is expected in the next three months subject to customary regulatory approvals.


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