Koch Industries Inc. has created a new board of directors for the Invista fibers business that it is acquiring from DuPont Co., but has released few details as to how that deal will affect Koch subsidiary Kosa Inc., North America's second-largest PET resin maker.
Kosa will be run as part of Invista, according to a Nov. 21 news release from Koch. Koch, an agricultural/industrial conglomerate based in Wichita, Kan., will pay DuPont $4.4 billion in cash for Invista, which produces polyester and nylon fibers and owns the Lycra and Stainmaster brands.
George Gregory, Kosa president and chief executive officer, will become a senior vice president with Invista, reporting directly to Jeff Walker, a senior Koch official who will become Invista's new chairman and chief executive officer. Current Invista President Steve McCracken, a 28-year DuPont veteran, will retain that title in addition to being named chief operating officer and a board member.
Rounding out the Invista board will be Koch Chairman and CEO Charles Koch and five other senior Koch officials.
Officials with Kosa, Koch and Invista currently are working together ``to determine the future operation of the business,'' according to Kosa spokeswoman Erica Luongo. More operating details will be confirmed in the first half of 2004, Luongo said.
The deal also means that PET resin will play a smaller role within Invista than it did for Kosa. Resin generated about half of Kosa's estimated $3 billion sales total last year, but will have an estimated share of only 16 percent of Invista's new $9.5 billion total.
Edgar Acosta, a PET analyst with DeWitt & Co. in Houston, said Kosa's PET business should not be affected much by the Invista deal. With an 18 percent share of North American resin capacity, Kosa trails only Eastman Chemical Co. in the region's PET market.
``You really have to look at this as a Koch deal and not a Kosa deal,'' Acosta said by phone Dec. 2. ``It's a way for Koch to be less exposed to certain chemical markets and find more end uses for its products.''
Most conversion of fiber lines to PET production within Kosa already has been done - primarily at a plant in Spartanburg, S.C. - so further conversion within the new Invista probably won't be an issue, according to one industry contact. Kosa also makes PET resin in Greer, S.C., and Queretaro, Mexico.
``This deal wasn't done for polyester or PET,'' the contact said. ``It makes Kosa a broader fiber company and gets Koch the Lycra brand and [purified terephthalic acid] technology.
``My primary concern as a buyer of PET would be what feedstocks are going to do next year and how that's going to affect my purchase price,'' the contact added. ``This deal won't affect [PET buyers] that much.''
Acosta added that Kosa's fibers business could benefit from the deal by acquiring ``a lot of intellectual power'' that DuPont had amassed within Invista.
DuPont already had sold its PET resin business - which ranked sixth in North America with a 5 percent market share - to Mexican conglomerate Alfa SA de CV in 2001. Alfa now runs the business as DAK Americas Inc.
The eventual location of Invista's headquarters also is undecided. The business currently is run from DuPont's campus in Wilmington, Del. Kosa is based in Houston, but also has a regional headquarters in Charlotte, N.C.
The combined Invista business is expected to have 24,000 employees - 18,000 from Invista and 6,000 from Kosa.