M&As: Nova Chemicals to sell EPS business to Alpek; Clariant re-launches sale of pigments unit

In a bid to refocus on its core olefin and PE business, Canada-based Nova Chemicals Corporation is selling its expandable styrenics (EPS) business to a subsidiary of Mexican chemical firm Alpek S.A.B. The parties expect to close the transaction in the fourth quarter. Headquartered in Calgary, Alberta, and wholly-owned by Mubadala Investment Company of UAE, Nova says it will use the funds as additional investments to advance a global circular economy for plastic.

Alpek subsidiary Styropek will acquire two US facilities producing 168,000 tonnes/year of EPS. The business consists of two product lines: EPS and Arcel resin, with manufacturing facilities in Pennsylvania and Ohio, along with commercial operations in Asia.

“This transaction provides us with immediate cash generation to further strengthen our balance sheet and focus on the safe and successful completion and start-up of our, world-class Advanced Sclairtech technology facility under construction in Ontario, Canada,” stated Luis Sierra, President/CEO of Nova.

“As a leader in the expandable styrenics business in the Americas, Alpek sees strong business opportunities associated with this purchase,” stated José de Jesús Valdez, Alpek’s CEO. “We look forward to welcoming our new team members and capitalizing on the existing momentum to create value for our shareholders.”

Alpek operates in the polyester (PTA, PET, rPET, and polyester fibres), and plastics & chemicals (EPS, PP, caprolactam, and other specialty & industrial chemicals). Alpek is a leading producer of PTA and PET worldwide, one of the largest rPET producers in the Americas, the largest EPS manufacturer in the Americas, and the only producer of PP and caprolactam in Mexico. In 2019, Alpek reported revenues of US$6.2 billion. It operates 28 plants in the US, Mexico, Canada, Brazil, Argentina, Chile and the UK, and employs more than 6,000 people.

Meanwhile, in other news, Swiss chemical firm Clariant is relaunching the sale of its pigments unit, after putting the auction on hold due to the Covid-19 pandemic engulfed the world and disrupted talks with prospective buyers.

The Muttenz-based company is expected to send out information packages to prospective buyers of the unit, with buyout groups including PAI, Lone Star, Triton and SK Capital.

The company has stated that it is continuing with its transformation programme, which has so far seen the divestment of the Healthcare Packaging and Masterbatches businesses. In April, according to a Reuters report, the unit had expected to fetch a price of US$984 million, or around eight times its core earnings. But now, it may fetch less.

Clariant's failed merger with Huntsman, in the face of activist investor resistance, and the joint venture it abandoned in August with Saudi Basic Industries (Sabic) have led to asset sales beyond what the Swiss company originally envisioned.

Clariant is concentrating on its faster-growing segments including catalysts, ingredients for shampoos, and chemicals for the oil and gas industries, while divesting commoditised operations.

(PRA)

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