Dutch chemical giant DSM NV is bidding to become Europe's top polyolefin producer by 2001 with its purchase of the polyethylene and polypropylene business of Vestolen GmbH, part of German firm Veba Oel AG.
Under the deal, DSM, currently Europe's fifth-biggest polyolefin producer, will acquire Vestolen's capacity for 331 million pounds per year of PE and 441 million pounds per year of PP at Gelsenkirchen, Germany.
The Dutch firm plans to build two new plants at Gelsenkirchen — a 661 million-pound-per-year linear low density PE plant, and a 551 million-pound-per-year PP plant — to bring its total European polyolefin capacity up to 5.51 billion pounds per year.
The two new plants will use gas-phase technology, DSM and Veba said in a news release.
DSM Chairman Simon de Bree said the 1 billion guilder ($485 million) project is in line with DSM's strategy to become a major PP supplier, and secures its strong position as a PE supplier.
Vestolen has annual sales of about 400 million deutsche marks ($220 million) and employs 550, according to the release. The acquisition is subject to approval by German and European trade authorities.
DSM chose to grow through acquisition because, it said, its Geleen, Netherlands, site offers it too little scope for extending PP production.
Today, DSM claims to own 10 percent of Western Europe's PE market and more than 7 percent of the region's PP market. In the past five years it has managed to improve its position in both resins, expanding its capacity overall by about 50 percent.
The Vestolen plants will be integrated into the DSM Polyethylenes and DSM Performance Polymers business divisions, both based at Sittard, Netherlands.
DSM's PE resin is supplied chiefly to the packaging industry, while its PP output serves various sectors, including automotive, packaging, electronic/electrical components and equipment.
The acquisition will extend DSM's range into the pipe sector, the company said.
In an unrelated deal, DSM Resins BV of Zwolle, Netherlands, will join forces with Polish resin supplier Organika-Sarzyna to sell unsaturated polyester resins in Central Europe.
The two firms signed a letter of intent to form a joint venture company to be known as DSM-Sarzyna Structural Resins, based in Warsaw, according to DSM Resins' parent DSM NV. The venture will market specialty resins from the Dutch-German joint venture DSM-BASF Structural Resins and commodity products of Organika-Sarzyna, Poland's top unsaturated polyester resin supplier.
The deal extends an existing 1995 agreement between the new firm's Dutch and Polish partners to distribute polyester resin in Poland. Polyester resin consumption in central European nations is growing 10 percent annually—a trend that should continue, according to DSM.
Organika-Sarzyna, near RzeszÃ³w, Poland, employs 1,600 and has annual sales of about 100 million Dutch guilders ($49.8 million).