Nova Chemicals Corp. and BP plc are joining forces in a 50-50 European joint venture to combine their styrene polymer operations. The deal will form the region's largest producer of polystyrene and expandable PS.
The venture will run seven PS and EPS plants in France, Germany, Sweden, the Netherlands and Britain with combined annual capacity of more than 1.9 billion pounds.
The partners each claim about 13 percent of the European styrenics market, behind BASF AG (20 percent) and Dow Chemical Co. (14 percent). Together, they will rank No. 1. In EPS, the venture will claim a 28 percent share, according to Nova.
The venture is expected to save the firms at least $40 million annually in administrative, commercial and operating costs, said Nova.
Some consolidation of product lines and production sites is likely, said Jeffrey Lipton, Nova Chemicals' president and chief executive officer.
``Those things will be at the forefront of our thinking,'' he said in a conference call. ``In Europe, you can't just snap your fingers and make that happen. You have to confer with unions and confer with governments. We will start that process quickly.''
Lipton said the deal will strengthen ``the weakest performing area of Nova Chemicals.''
BP is based in London; Nova is headquartered in Pittsburgh.
The venture will be headquartered in Fribourg, Switzerland, and should generate about $1 billion in annual sales. The venture still needs European antitrust approval, a hurdle Lipton said he expects no difficulty in clearing.