Solvay to grow in Brazil, sale of Indupa PVC asset near, says exec

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: December 6, 2013 10:02 am ET
Updated: December 6, 2013 10:04 am ET

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers, Latin America
Companies & Associations Solvay SA

SÃO PAULO, BRAZIL — Belgium’s Solvay SA is revising its portfolio while pursuing organic growth and acquisitions following the integration of Rhodia SA this year. The plan that includes expanding in niche markets in Brazil where it’s strongest, while divesting from local operations like PVC where profits have disappointed.

“We’re getting out of businesses where other companies can do better than Solvay, and boosting our presence in areas where we are, or can be, stronger,” Gilles Auffret, executive committee member of Solvay Group and former chief operations executive at Rhodia, told Brazilian newspaper Valor Economico.

As part of that strategy, Solvay announced in early October a $1.3 billion purchase of U.S.-based Chemlogics, a supplier of chemicals for the oil and gas industry, allowing the group to double its operations in the field. It also put Brazil- and Argentina-based PVC producer Solvay Indupa up for sale earlier this year, and announced plans to set up a joint venture with INEOS in Europe.

The April 2011 purchase of Rhodia for $4.8 billion provided Solvay a stronger presence in Brazil. Its investments in Brazil over the past six years have totaled $360 million, or roughly $60 million per year. That pace should continue in the coming years, Auffret said.

“Rhodia has been present in Brazil for 94 years, we can say that it is almost a French-Brazilian company,” he said. “We are optimistic about the future.”

Use of biomass as a feedstock for chemicals and power generation has “entered the radar” of the group in Brazil, Auffret said. Traditional businesses like textiles and engineering plastics, where Rhodia has a strong market presence, will remain in the local portfolio, he added.

Rhodia announced a deal in August with GranBio to produce biochemicals in Brazil from renewable sources, primarily bio n-butanol, for applications in the paint and solvent industries. That project is still under study, Auffret said, but could start operations by 2015. Rhodia has already invested between $60 million and $70 million in a biomass project in Brotas, São Paulo state.

Solvay Indupa has two PVC plants producing resin for the production of pipes and fittings, based in Santo André, Brazil, and Bahia Blanca, Argentina, with combined production capacity of more than 1 billion pounds per year.

Brazil’s Braskem and Mexico’s Mexichem have confirmed interest in recent months in purchasing the Indupa assets, which could go for between $600 million and $800 million, according to sources cited by Valor Economico.

Latin America represented 10 percent of Solvay Group’s 2012 sales, or 14 percent if Solvay Indupa is included. The group plans to finalize the sale of its 70 percent majority share in Indupa “as soon as possible,” said Auffret, citing progress with interested buyers.

In the company’s third quarter financial report released in October, Solvay noted that results regarding Solvay Indupa were included in the “discontinued operations” segment, a sign that a sale may be near. The decision to sell the South American PVC business is part of the group’s strategy to get out of areas where other companies can do better.

“The PVC business was not as profitable as we expected,” Auffret said.


Comments

Solvay to grow in Brazil, sale of Indupa PVC asset near, says exec

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: December 6, 2013 10:02 am ET
Updated: December 6, 2013 10:04 am ET

Post Your Comments


Back to story


More stories

Image

Newell Rubbermaid to acquire Contigo brand

July 21, 2014 5:00 pm ET

Consumer products company Newell Rubbermaid Inc. has signed an agreement to acquire Ignite Holdings LLC, owner of the Contigo and Avex brands of...    More

China launches investments in Belarus

July 21, 2014 10:10 am ET

China is preparing to invest in a major bottle grade PET production project planned by the Belarus PET and polyester fibers producer...    More

Image

Huhtamäki to evaluate its films business

July 21, 2014 9:52 am ET

Finland-based plastics packaging group, Huhtamäki Oyj, has announced that it is evaluating its options regarding its films business, due to its...    More

Image

Thermoforming Technology Group adds Lyle Industries to its portfolio

July 18, 2014 2:48 pm ET

Thermoforming Technology Group LLC has expanded its thermoforming equipment presence with the acquisition of Lyle Industries Inc.    More

Image

Polynt, CCP create composite resins giant

July 18, 2014 10:13 am ET

France's Total SA has agreed to sell CCP Composites to Polynt Group SpA, based in Italy, for an undisclosed price.    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events