Indorama Ventures Plc (IVL), a global chemicals producer, announced it will acquire Brazil-based Oxiteno S.A. Indústria e Comércio, a subsidiary of Ultrapar Participações S.A.
The acquisition gives IVL a broader portfolio in high-value surfactants and extends its existing integrated oxides and derivatives (IOD) business.
IVL will purchase Oxiteno for US$1.3 billion (subject to adjustments at closing), with a deferred payment of $150 million in 2024.
The transaction is subject to customary conditions to closing, including approval by relevant regulatory authorities.
The transaction is expected to close in the first quarter of 2022 and will be earnings accretive immediately.
Financing is secured through deferred payment, using existing extra cash on the firm's balance sheet, free cash flow generated from existing businesses, short-term loans against working capital and the balance as long-term debt.
Through the acquisition, IVL will assume a market position in technologies catering to niche, IP-rich and value-added applications in home and personal care, agrochemicals, coatings, and oil and gas markets.
The surfactants market has seen consistent growth over the last decade, driven by trends in population growth, urbanisation and increasing hygiene awareness amid the pandemic.
With 11 manufacturing plants, Oxiteno will complement IOD's footprint in the US and Latin America, while its five research and tech centres will add to IVL's innovation credentials in green chemistry.
IVL expects to realise synergies of $100 million by 2025 through portfolio adjustments, asset optimisation and operational enhancements.
"This acquisition is a natural fit for us. We have a solid track record of continuously driving value for shareholders through successfully integrating 50 acquisitions over the past 20 years," said Aloke Lohia, chief executive of the IVL group.
"With Oxiteno, we are creating a global leader in surfactants. By bringing our companies together, we are strengthening our customer value proposition, our market reach, and our experienced team."