Fast-changing oriented polypropylene film markets took another sharp turn as Mobil Chemical Co. and Hoechst AG called off joint venture talks.
The firms signed in March a letter of intent to merge their OPP film businesses into a $1 billion-a-year venture. Observers were stunned by the Sept. 1 announcement that negotiations fell apart. The companies' representatives said there was no chance the two firms might reopen merger discussions with each other.
Mobil and Hoechst could not agree on evaluation figures for their respective businesses, according to Gabriele Rua, spokeswoman for Hoechst's Trespaphan OPP films business. ``[The firms] couldn't agree on what they were worth,'' Rua said in an interview from Neunkirchen, Germany.
Rua said she couldn't confirm a London Financial Times report that Hoechst now is talking to another potential partner for OPP films. She said Hoechst is looking at other ways of going forward, including finding another partner or buyer for its OPP films business.
``We're not desperate,'' Rua stressed. ``We have other alternatives that are attractive.''
The breakdown in talks is the latest in a string of major OPP film developments. Applied Extrusion Technologies Inc. last month turned down a takeover offer by Huntsman Packaging Corp. that attached a 48 percent premium on AET's stock price. AET in July agreed to buy Montell NV's OPP film business in Europe and Asia, giving AET its first overseas operations.
Huntsman remains interested in AET and is giving serious consideration to its next move, Huntsman spokesman Don Olsen said from the firm's Salt Lake City headquarters.
Olsen said Huntsman officials ``were as surprised as everyone else'' by the Mobil and Hoechst decision not to merge. The firm's packaging officials still were digesting the news last week and couldn't say whether Huntsman would be interested in a deal with Hoechst, according to Olsen.
Mobil spokesman Mike Kimmitt declined to elaborate on why the talks broke down. He said from Fairfax, Va., that Mobil has no specific acquisition alternative but it ``will evaluate any opportunity.'' He described commodity OPP film markets as generally depressed. Mobil will get a boost in capacity early next year when it brings up a new 33 million-pound- per-year OPP line at its Kerkrade, Netherlands, plant.
Analyst Douglas Groh with Merrill Lynch Capital Markets said the recent stock market nose dive could have affected Mobil's and Hoechst's evaluation process.
``The 500 point drop in the Dow Jones index impacted a number of large merger plans, especially those based on stock transactions rather than cash,'' Groh said from New York.
AET officials in Peabody, Mass., were unavailable to comment on their progress in negotiations with Montell, their potential response to another Huntsman offer, or the impact of the Mobil and Hoechst breakdown.