Indorama Ventures Plc (IVL), a global chemical company, has fully acquired a 100% stake in Brazil-based Oxiteno S.A. Indústria e Comércio.
The acquisition of Oxiteno, formerly a subsidiary of Ultrapar Participações S.A., was announced in August 2021 and is effective as of April 1, 2022 after Brazil's Administrative Council for Economic Defense approved the transaction.
As a result of the acquisition, IVL extends its growth profile into Latin America and the US. IVL is now among the leading producers of surfactants in the Americas, with additional potential to expand in Europe and Asia.
Dilip Kumar Agarwal, IVL's chief executive, said the strategic acquisition aligned with the firm's 2030 vision of a growing role in industry leadership and sustainability.
"Our continued goal is to double our Ebitda [earnings before interest, taxes, depreciation and amortisation] every five years. Based on our experience of completing some 50 acquisitions in 20 years, the quality of Oxiteno's people and our shared values were important considerations," said Mr Agarwal.
"Oxiteno brings an excellent management team, strong customer relationships in Brazil, Uruguay and Mexico, expertise in sustainability innovation, and a strong ESG/sustainability programme."
He said IVL looks forward to fulfilling its purpose of reimagining chemistry together with Oxiteno to create a better world.
Oxiteno becomes part of IVL's Integrated Oxides and Derivatives (IOD) business segment, which IVL formed in 2020 with the purchase of assets from US-based Huntsman (Spindletop transaction). IOD is a high-margin growth driver alongside IVL's traditional combined polyethylene terephthalate (PET) necessities and fibres segments.
The Oxiteno acquisition includes 11 manufacturing plants in Latin America and the US, five R&D centres, a management team, a solid environmental governance record as well as expertise in green chemistry innovation.
Through Oxiteno, IOD assumes a leading position in technologies catering to innovation-led, high-value-add surfactant solutions in attractive home & personal care, crop solutions, and coating and resources markets. This diversity increases IOD's earnings stability and resilience.
Alastair Port, executive president at IOD and IVL, said the acquisition propels IOD's growth potential and adds a premium to the company's integrated global portfolio.
"Oxiteno's surfactants business extends our profile into higher-margin branded products that are closer to end-consumers in very attractive growth markets. These are exciting times for IOD, and I welcome our new Oxiteno colleagues to our journey together," he said.
João Parolin, chief executive of IOD, South America, IVL, said the transaction is an opportunity for Oxiteno to continue growing, driving transformation, and contributing to peoples' well-being through chemistry.
"We are very confident about our future, especially considering IVL's vision is 100% aligned with ours. Together, we will continue to drive sustainability-led innovation to build evergreen portfolios that leave a positive legacy for society," said Mr Parolin, who was formerly the head of Oxiteno.
The Oxiteno transaction has an enterprise value of 6.1 times EV/Ebitda based on 2021 results and is earnings accretive immediately. It is fully financed by free cash flows, including a deferred payment of US$150 million in April 2024, working capital short-term assets, and interest-bearing debt.
IVL expects to drive savings of $100 million through portfolio adjustments, asset optimisation and operational excellence.