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Baht/$ 34.24/29 (Bid/Ask)
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Thai Oil Plc (TOP), the country's largest oil refiner, is expanding into the solvents industry by acquiring Shell's solvent production and marketing arm in Thailand and Vietnam.
Thai Oil signed the deal worth a total of US$120 million yesterday with Shell Overseas Investment BV and Pattanakij Chemical Co for the Thailand business, and with Shell Company of Thailand Ltd and Shell Vietnam for the acquisition of the solvents business in Vietnam.
TOP president Viroj Mavichak said the agreement involved Shell's Thai solvents marketing and distribution networks and an 80.52% stake in Sak Chaisidhi (SAKC), a Shell-Pattanakij Chemical joint venture that makes 80,000 tonnes a year of solvents in Map Ta Phut.
TOP plans to set up a new subsidiary to manage the solvents business as it sees high growth potential both locally and in Vietnam. Sukrit Surabotsopon, assistant managing director for strategic planning, said the deal would generate immediate income from the customer network of Shell, the market leader in solvents in Thailand and Vietnam.
"It is also a great opportunity for us to invest overseas," said Mr Sukrit. "Vietnam is good as a first step... the demand growth there offers a better chance than similar markets."
A solvents operation also creates synergy with TOP's refinery since solvent feedstocks are oil-refining byproducts. Key solvents customers are the coatings, rubber, agrochemical and adhesives industries. TOP has a refining capacity of 275,000 barrels per day and has expanded into related businesses including power generation and petrochemicals.
TOP shares closed yesterday on the SET at 29.75 baht, up 2.50 baht, in trade worth 314 million baht.
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