IVL closing 3 acquisitions in 3 countries this year
text size

IVL closing 3 acquisitions in 3 countries this year

SET-listed Indorama Ventures Plc (IVL), a leading manufacturer of polyester and plastic packaging material, expects three acquisition deals to be completed this quarter with a combined value not exceeding US$1 billion (32.5 billion baht).

Chief executive Aloke Lohia said the company does not need to increase capital for these acquisitions as their internal free cash flow, worth around $1 billion, is sufficient for the takeovers.

The three deals in the pipeline are Medco Plast for Packing and Packaging Systems SAE in Egypt; Kordarna Plus in the Czech Republic, which is a major tyre manufacturer in Europe; and DuPont Teijin Films, the manufacturer of biaxially-oriented polyethylene terephthalate and polyethylene naphthalate films.

Medco is the largest polyethylene terephthalate (PET) converter in Egypt, with a market share of 25% and production capacity of 70,000 metric tonnes per year for PET preforms.

Kordarna Plus has a production capacity of 57,000 tonnes per year and IVL has invested a 100% stake in this company via IVL's subsidiary, Indorama Ventures Spain SL.

For DuPont Teijin, the company has eight plants in the US, Europe, China, and has total combined production of film and polymer 277,000 tonnes a year.

Revenue from these deals will be recognised next year and the company will increase earnings before interest, tax, and depreciation (ebitda) target for 2019, said Mr Lohia.

Earlier, the company projected its ebitda in 2019 at 1.75 billion baht, excluding the three deals. Mr Lohia said IVL's ebitda over the next three years will expand by a 12% average annually as a result of the acquisitions.

In 2017, the company reported revenue of 291 billion baht and net profit of 20.9 billion. Average ebitda growth over the past decade has been 14%.

For the third quarter, the company has benefited from an increase of PET, purified terephthalic acid (PTA), and paraxylene products by around 20% against the first half, driven by rising oil prices.

In a related development, IVL's acquisition of a PTA-PET production facility in Corpus Christi, Texas, owned by M&G USA Corp, remains in progress.

In March, IVL, through its indirect subsidiary Indorama Ventures Holdings LP, formed an equal-ownership joint venture named Corpus Christi Polymers LLC, with Alpek SAB de CV and Far Eastern Investment Holding to purchase the plant along with intellectual property and utility assets from M&G.

The PTA-PET plant under construction is expected to be the largest single line vertically integrated PTA-PET production facility in the world, with PET capacity of 1.1 million metric tonnes.

Do you like the content of this article?