Hoechst AG's sell-off of its specialty chemicals operations continued last week as a consortium of Koch Industries Inc. and Mexican businessman Isaac Saba agreed to buy Trevira, Hoechst's worldwide polyester business.
New York-based Trevira is North America's second-largest PET resin maker.
The deal, which had been rumored for several months, will be formalized between Kosa Ltd., a subsidiary of Wichita, Kan.-based Koch, and Saba's Grupo Xtra, based in Mexico City.
Trevira produces about 1.4 billion pounds of PET resin annually in North America at plants in Spartanburg, N.C.; Kingston, Ontario; and Queretaro, Mexico. The company also is a major PET maker in Europe and a top worldwide producer of polyester fibers and filament.
Koch and Saba had previous ties to Trevira. Koch, an oil and chemicals giant and the second-largest private business in the United States, supplies Trevira with intermediates, including paraxylene. Saba owns 32 percent of Grupo Celanese SA, a Mexican polyester business in which Trevira holds a 51 percent share.
``We see this as an excellent opportunity to extend our participation in the growing polyester value chain,'' Kosa Ltd. President Cy Nobles said in a news release.
Saba added that Grupo Xtra's experience in the polyester business, combined with Koch's operating expertise, will form ``a truly global enterprise.''
In an April 22 telephone interview from Shelby, N.C., Bill Harris, Trevira president and chief executive officer, said he could see a change in the firm as he prepared to address a group of sales representatives.
``I already see more smiling faces in this parking lot,'' Harris said. ``You want to be in business with someone who wants to be in the business, instead of someone who has said they don't want to be in these markets anymore.''
A long-term commitment from Koch/Saba could help Trevira get through some choppy waters in the short-term. Though PET resin markets are improving profitwise, a drop-off in Asian fiber consumption has ``put a lid'' on fiber prices, said Harris, who has held his position since 1994.
For Hoechst, the sale is part of its move away from specialty chemicals and into the less-cyclical life-science market.
The purchase should help Trevira go after business it may have lost while its future was uncertain, said PET industry analyst Edgar Acosta of Houston's DeWitt & Co. consulting firm.
``Trevira will be able to come out of the gates a little more and be more aggressive,'' said Acosta, who estimates the acquisition's value at $1.5 billion to $2.5 billion.
He added that Trevira should be able to make new investments — including a world-scale PET resin plant in Brazil, a purified terephthalic acid plant in North America and an aromatics complex in Mexico—within five years.
The sale includes Trevira's interests in polyester joint ventures in China and Turkey. The Koch/ Saba group will hold separate discussions on the acquisition of Trevira's 56 percent share of Celanese Canada, a polyester unit in Millhaven, Ontario. Hoechst will retain Trevira's polyester holding in South Africa.
The deal is subject to approval by Hoechst's board, the Koch/Saba consortium and Hoechst's joint venture partners. The process should take several months.
Hoechst earlier had sold Trevira's film and European textiles businesses. The Trevira units involved in the Koch/Saba deal posted $3 billion in sales in 1997.