Ineos Group plc will move into the vinyl arena with its acquisition of a controlling interest in Europe's ailing PVC leader, EVC International NV.
EVC of Amsterdam, the Netherlands, signed a tentative agreement in December with Ineos Capital Ltd., the British acrylic resin and sheet supplier's newly formed investment arm. Ineos Capital will provide EVC with an equity injection of 75 million euros ($68 million).
The deal is a lifeline for EVC, stabilizing its financial position. According to EVC, the cash infusion secures EVC's downstream rigid PVC sheet and compounding operations, which were being considered for sale, and gives EVC breathing space to complete a restructuring and cost reduction program.
The deal also gives EVC more purchasing power for raw materials, particularly ethylene.
The companies expect to finalize the deal in the first quarter of 2001. Ineos of Southampton, England, will own 52.7 percent of EVC's voting shares. That includes 75 percent of 18 million new EVC shares at a cash price of 4 euros ($3.64) each, plus 2.3 million EVC shares that Ineos is buying from Imperial Chemical Industries plc.
ICI had announced Dec. 5 that Ineos was buying three of its chemical operations for about 325 million ($484 million). In addition to the units, which make chlorine derivatives and fluorine-, silica- and alumina-based products, the purchase includes ICI's stake in EVC.
The three ICI operations have combined sales of 722 million ($1 billion). London-based ICI expects to conclude that deal in January.
EVC had reported operating losses of $34 million in 1998 and $35 million in 1999, and the company is projecting another loss in 2000.
In November, EVC had announced a major management shake-up, including the departure of its longtime chairman and chief executive officer, Ettore dell'Isola, and Chief Financial Officer Nigel Taylor. The pair were replaced by corporate turnaround specialists.
Ineos formed in 1998 to buy a former Union Carbide Corp. ethylene oxide and glycol plant in Antwerp, Belgium. The company became a global leader in the acrylic resin and sheet business in 1999, when it bought ICI's acrylic unit.
Ineos expects to report annual sales of 3 billion euros ($2.7 billion) and has 6,000 employees around the world.