Koch gets into US shale gas boom with PetroLogistics buy

Privately held US firm Koch Industries is acquiring PetroLogistics, through subsidiary Fling Hills Resources, for US$2.1 billion, including debt. PetroLogistics owns and operates the only propane dehydrogenation facility in the US, and its plant is among the largest of its kind in the world. The facility began operations in 2010 and has an annual production capacity of approximately 1.45 billion pounds. With the acquisition, Koch will be able to convert shale gas into propylene for petrochemicals

Propylene has traditionally been made from the petroleum distillate naphtha, but cheap shale is gaining importance as a feedstock. In view of the cheaper price tag on natural gas, compared to Europe, a number of companies, including Dow Chemical and BASF are building plants in the US to convert natural gas into propylene.

Under the terms of the agreement Flint Hills will acquire all of PetroLogistics' outstanding common units for US$14 per common unit in cash, except for those common units owned by Lindsay Goldberg LLC, PetroLogistics' Executive Chairman and its President and Chief Executive Officer, which will be acquired for US$12 per common unit in cash.

Koch, with annual revenue of US$115 billion, was rated as the second-largest private company in the US in 2013 by Forbes. The company, led by brothers David and Charles Koch, also owns Invista, one of the world’s largest integrated producers of nylon, spandex and polyester are used to produce clothing, carpet, car parts and countless other everyday products.

It also has Molex Incorporated in its stable. Molex is a global manufacturer of electronic, electrical and fibre optic interconnection systems. It offers about 100,000 products to a number of markets, including mobile devices, infotech, consumer electronics, automotive, telecommunications, industrial, medical, military and aerospace. The company operates 45 manufacturing locations in 17 countries.


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