based AT Plastics Inc. and Acetex Corp. of Vancouver have entered into a definitive agreement to merge, creating an integrated chemical company focusing on specialty plastics and intermediate chemicals.
AT Plastics shareholders will vote in early August to approve the C$200 million (US$147.2 million) deal, which would make AT Plastics a wholly owned subsidiary of Acetex.
``I am delighted to announce this agreement,'' Brooke Wade, chairman and chief executive officer of Acetex, said in a news conference. ``It marks an important step forward in our vision of creating a world-class chemical company through the careful acquisition of high-quality chemical businesses around the world.''
AT Plastics develops and manufactures specialty plastic resins and film products for niche markets in North America and around the world.
Within North America, AT Plastics claims to be the largest provider of films for greenhouse and nursery covers, as well as the second-largest supplier of silage and flexible film grain containment systems.
The production facilities, in Edmonton, Alberta, consist of four blown film lines and cutting and packaging operations.
The firm has the ability to produce films more than 60 feet wide and with properties like ultraviolet inhibiting and anti-condensation.
The specialty polymers division operates a sophisticated and advanced high-pressure autoclave reactor, with five production lines in Edmonton.
The facility manufactures ethylene vinyl acetate resins for markets such as thermal laminated film, hot-melt adhesives, medical and pharmaceutical, flexible packaging and automotive products.
About 67 percent of sales volume in 2002 was to the United States, 9 percent was exported overseas, and the balance was sold to Canadian customers. Sales of specialty polymers accounted for C$208.7 million (US$153.6 million), while films brought in C$44 million (US$32.4 million) in 2002.
Acetex is Europe's second-largest producer of acetic acid and polyvinyl alcohol and the third-largest producer of vinyl acetate monomer.
These chemicals and their derivatives are used in the automotive, construction, packaging, pharmaceutical and textile industries.
The company has plants in France and Spain and employs 540.
The firm recorded sales in 2002 of about $205.5 million.
``The businesses of the merged company will range from AT Plastics' specialty plastics to Acetex's chemical intermediates businesses,'' said Wade. ``AT Plastics has built an excellent reputation as a manufacturer of high-quality and highly specialized polymer resins, compounds and films products. Vinyl acetate monomer, which is a primary product at Acetex, is a major feedstock of AT Plastics. Although there will be no physical integration, this product synergy will provide financial strength to the company.''
``One of the main benefits to our shareholders is reducing our debt servicing costs and accelerating growth with the merger,'' Gary Connaughty, AT Plastics president and CEO, said in a telephone conference.
AT Plastics completed its debt restructuring in January 2002. The company holds about C$150 million (US$110.6 million) in debt and pays C$20 million (US$14.7 million) every year in interest.
Under the agreement, AT Plastics shareholders will exchange each common share for one-sixth of one Acetex common share. The deal values each AT common share at C$1.06 (US$0.78).
``Both companies' businesses enjoy a solid market position, competitive cost structure and a favorable exposure to the cyclicality of the chemical industry,'' Wade said. ``We believe that we can generate significant shareholder value as we leverage the AT Plastics manufacturing expertise and proprietary technologies with our own substantial chemical production and financial resources.''
Pending shareholder approval, when the deal's complete, former AT Plastics shareholders will own about 25 percent of the common shares of Acetex. AT Plastics' largest shareholder, Perry Capital LLC, which controls around 28 percent of AT Plastics common shares, has agreed to vote for the deal.