Union Carbide Corp. announced Nov. 13 it will spend $260 million to become the fifth-largest producer of polypropylene in North America. Union Carbide said it will buy Shell Oil Co.'s U.S. PP resin manufacturing businesses. The announcement was expected.
For its $260 million, Union Carbide will get Shell's Norco, La., PP facility and its share of Seadrift Polypropylene Co. of Houston, a 50-50 venture between Shell and Union Carbide.
The acquisition will give Union Carbide capacity to make 800 million pounds of PP a year.
Paul Raman, chemical industry analyst with S.G. Warburg & Co. Inc. of New York, estimated sales for the facilities at $260 million a year. Raman also estimated the replacement cost of the facilities at $290 million.
Shell of Houston agreed in 1994 to divest its U.S. PP business units in an agreement with the Federal Trade Commission related to the commission's antitrust concerns over the merger of the Royal Dutch/Shell Group's worldwide PP business with Montedison SpA of Milan, Italy. That merger formed Montell Polyolefins, based in Hoofddorp, Netherlands. Shell Oil is a unit of Royal Dutch/Shell Group of London and The Hague, Netherlands.
Union Carbide confirmed June 1 that it made an offer to buy Shell's U.S. PP business, and was considered the likeliest buyer because of the Seadrift joint venture the companies shared.
Seadrift uses Union Carbide's proprietary Unipol process to make PP.
The companies expect to close the purchase by the end of this year.
Union Carbide will make the PP business a part of its existing polyolefins operations, with offices at the corporation's headquarters in Danbury, Conn., spokeswoman Ivana Tibbetts said Nov. 14.
The business includes manufacturing and marketing of PP resins and catalysts, technology related to the making of PP, and related research and development facilities at Shell's West-hollow Technology Center in Houston, which Union Carbide will lease as a part of the acquisition.
Norco has a 500 million-pound-per-year PP reactor, while Seadrift has a 300 million-pound-per-year PP reactor. The facilities produce random and impact copolymer PP resins that are sold primarily for injection molding applications in North America. The company said its markets include packaging, automotive and appliances.
Union Carbide primarily is a producer of polyethylene and a developer and licenser of polyolefin technology. It licenses PE and PP production technology under the Unipol trade name.
It launched the Seadrift joint venture with Shell in 1983 to develop and license its Unipol PP technology, a gas-phase process, and to develop and manufacture advanced PP resins.
