After acquiring half the company in 1990, Exxon Chemical Co. of Houston said Oct. 27 it will acquire the remainder of Paxon Polymer Co. L.P., a maker of high density polyethylene. Exxon signed a binding redemption agreement that calls for AlliedSignal Inc. to transfer its share of Paxon to Exxon by the end of this year. Terms were not disclosed.
AlliedSignal is based in Morristown, N.J.
Paxon has 500 workers who produce 1.5 billion pounds of HDPE a year at its headquarters and plant in Baton Rouge, La. Paxon uses a Phillips, slurry-loop process to produce HDPE. It has annual sales of $500 million.
Paxon's primary markets are dairy cooperatives and other food packaging concerns. Its markets also include toys, oil and gas containers, industrial drums and automotive fuel tanks.
Vin Hoey, spokesman for Exxon, said his company is planning to operate Paxon as a distinct, ongoing business unit.
Hoey said an expansion is under way that will increase the plant's capacity to 1.6 billion pounds of HDPE a year by the end of 1996.
Lawrence Bossidy, chairman and chief executive officer of AlliedSignal, said in a prepared statement the HDPE business was not strategically important to his company, which increasingly is focusing on specialty chemicals segments.
However, the HDPE business clearly is important strategically for Exxon.
Hoey said the acquisition ofthe rest of Paxon is an important and natural step for Exxon because it extends the company's product line of HDPE resins.
Before 1990, Exxon did not have HDPE production capacity.
After acquiring a 50 percent interest in Paxon, Exxon built 396 million pounds of HDPE production capacity at its Mont Belvieu, Texas, facility, and built 638 million pounds of HDPE production capacity at its Sarnia, Ontario, facility.
HDPE production began at Mont Belvieu in 1992 and at Sarnia in 1993.
At Mont Belvieu, Exxon uses a Mitsui, stir-slurry production process.
At Sarnia, Exxon uses a Unipol, gas-phase production process. The Unipol process can swing to produce either linear low density PE or HDPE, but Hoey said the Sarnia plant primarily makes HDPE. Exxon also produces more than 800 million pounds of LLDPE and LDPE a year.
Industry executives said AlliedSignal indicated about three years ago it intended to exit the HDPE business, but a spokesman for AlliedSignal said his company never made a formal announcement to that effect. However, executives of competing companies said the Oct. 27 announcement was not surprising because they presumed AlliedSignal would sell the rest of Paxon to Exxon.
Because of its large - and expanding - production capacity for ethylene, Exxon is viewed as being in a better competitive position to produce HDPE independently than AlliedSignal.
Paxon was founded in 1955 by W.R. Grace & Co., and AlliedSignal acquired it in 1966.
When AlliedSignal sold Exxon the 50 percent interest in 1990, the companies formed the limited partnership. The limited partnership had Exxon supplying ethylene feedstock and Allied-Signal operating the facility.