Advertisement

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Business

Latin American Firms Globalize

Outward Reach: Mexican and Brazilian chemical companies acquire internationally

by Michael McCoy
February 8, 2010 | A version of this story appeared in Volume 88, Issue 6

[+]Enlarge
Credit: Sunoco
Braskem is buying three plants and this technology center in Pittsburgh from Sunoco.
Credit: Sunoco
Braskem is buying three plants and this technology center in Pittsburgh from Sunoco.

Braskem and Mexichem, two of Latin America’s leading chemical companies, have struck deals that will expand their manufacturing footprints into the U.S. and beyond.

Braskem has agreed to acquire Sunoco’s polypropylene business. The purchase, for about $350 million in cash, will mark the Brazilian giant’s entry into U.S. chemical production.

Sunoco operates polypropylene plants in La Porte, Texas; Marcus Hook, Pa.; and Neal, W.Va. Their potential combined annual output is 950,000 metric tons, about 13% of installed U.S. polypropylene capacity, by Braskem’s estimate. The purchase was announced just days after Braskem reached a deal to take control of its largest local rival, Quattor, for $380 million plus the assumption of some $3.6 billion in debt (C&EN, Feb. 1, page 11).

Sunoco has been trying to sell its chemical arm since late 2008, when CEO Lynn L. Elsenhans told analysts that the business was not reaching her target for returns. Sunoco says it will retain its phenol and phenol derivatives business, which operates plants in Philadelphia and Haverhill, Ohio.

Mexichem, meanwhile, will buy Ineos’ fluorochemicals business, which has annual sales of about $420 million and plants in Europe, the U.S., Japan, and China. Ineos, which had to renegotiate financing arrangements with its creditors last year, says it wants to focus on its large-scale petrochemicals business.

Mexichem is the world’s largest producer of fluorite, a fluorine-containing mineral, and the second-largest producer of hydrofluoric acid, the key fluorochemicals feedstock. CEO Ricardo Gutiérrez Muñoz says the purchase will add value to these raw materials through vertical integration.

For both companies, the deals represent expansion beyond their Latin American production bases. Rina Quijada, CEO of Intellichem, a Latin America-focused consulting firm, notes that Braskem and Mexichem have already bought many of their home-country rivals. “It’s hard for them to grow in Brazil and Mexico,” she says. “With the current financial situation, the U.S. becomes an attractive market for investment.”

Advertisement

Article:

This article has been sent to the following recipient:

0 /1 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.