Novacor Chemicals Ltd. signed a letter of intent to acquire DuPont Canada Ltd.'s polyethylene business for about C$80 million (US$60 million), the two firms announced Dec. 22. The purchase would include DuPont Canada's 500 million-pound-per-year PE plant in Sarnia, Ontario, proprietary Sclair technology and the firm's global Sclairtech PE production licensing business. It would boost Novacor's PE capacity to 2.2 billion pounds per year, about 7.2 percent of North American capacity, Novacor said in a news release.
The price includes C$45 million (US$33.8 million) for fixed assets and about C$35 million (US$26.3 million) to cover working capital for such items as inventory and accounts receivable, John Feick, Novacor's president and chief operating officer, said in a telephone interview from the firm's Calgary, Alberta, headquarters.
DuPont Canada announced April 12 its intention to sell its PE business.
DuPont Canada Vice President John Cameron said in a news release that the PE business does not fit the firm's long-term strategy. It has been expanding its modified polymers and industrial chemicals businesses and investing in fibers, fluorochemicals and nylon raw materials.
Bill Barley, DuPont Canada senior vice president of finance, said development of single-site catalysis resin production by competitors and other market factors would require the company to invest heavily in its PE business. More attractive investment opportunities exist in specialty markets, including modified polymers and nylon, he said in a telephone interview from DuPont Canada's Mississauga, Ontario, headquarters.
Not included in the deal is DuPont Canada's film plant in Whitby, Ontario, or its Sarnia-based modified polymers business. Feick said the two companies are working on an arrangement for Novacor to supply those operations with PE.
Novacor intends to renew single-site PE production catalysis research that DuPont Canada undertook about 15 years ago, according to Feick. Novacor currently is not researching this area and DuPont Canada did not commercialize its work.
DuPont Canada's Sclair solution technology is attractive because it allows efficient production of short runs of high-value resins. It can make linear PE resins from low densities to high densities and with narrow or broad molecular weight ranges.
Novacor now has a total of 600 million pounds per year of Unipol gas-phase and high-pressure tubular PE production capacity in Sarnia. Its Joffre, Alberta, facility has 1.1 billion pounds per year of Unipol capacity.
Novacor supplies ethylene to all of its PE reactors and DuPont Canada's PE plant.
Novacor intends to offer employment to more than 300 staff in DuPont Canada's PE business.