Malaysia's Titan Chemicals Corp. Bhd. has completed the acquisition of PT Petrokimia Nusantara Interindo, Indonesia's largest polyethylene producer, with annual output of 992 million pounds a year of linear low density polyethylene/ high density PE in Kaputen Serang.
This $78 million deal provides Titan Chemicals with additional PE manufacturing capability, positioning it as the largest polyolefins producer in Southeast Asia, and also gives it a pre-eminent position in the Indonesian PE market, said Titan Chemicals, Malaysia's first and largest integrated producer of olefins and polyolefins.
Titan Chemicals Managing Director Donald M. Condon Jr. said the acquisition, made through subsidiary Titan Petchem (M) Sdn. Bhd., fits into the group's business strategy and will result in many synergies.
Condon said the PT Peni acquisition, from Indonesian-owned Golden Park Ltd., will increase the company's poly- olefins production capacity by 50 percent, as well as open the door to a huge Indonesian market of 242 million people with a growing appetite for polymer-based products.
The Indonesian polyethylene market is forecast to grow by 6 percent a year through 2010 to 890.6 million pounds a year of HDPE, 860 million pounds a year of LLDPE and 230 million pounds a year of LDPE.
To acquire PT Peni, Titan Chemicals paid $20 million in cash and assumed $58 million of Peni's bank debts, according to Francis Pereira, Titan's vice president of corporate development.
The $20 million is coming from internal funds, a Titan spokesperson said.
Titan Chemicals expects to resume feedstock supply to the newly acquired plant, to be renamed PT Titan Petrokimia Nusantara, within eight weeks. Its product lines are ready for operation at the plant complex, which, however, has been facing feedstock shortages since last December, the company said.
Titan Chemicals' Malaysian revenue grew to 4.5 billion Malaysia ringgit ($1.19 billion) in 2005 from 3.56 billion ringgit in 2004, and net income rose to 362 million ringgit ($96 million) from 262 million ringgit a year earlier.
Its 2006 nameplate production capacity at the Pasir Gudang industrial estate in southern peninsular Malaysia is 142.4 million pounds a year of ethylene, 754 million pounds of propylene, 441 million pounds of benzene/toulene, 125 million pounds of LLDPE/ HDPE/metallocene-based LLDPE/ LDPE and 838 million pounds of polypropylene homopolymers and copolymers.
Meanwhile, on March 6, Titan Petchem signed 261 million ringgit contracts to procure and construct a butadiene extraction plant and a propylene plant at its site in Pasir Gudang.
The new plants, expected to expand the company's existing capacity by 253.5 million pounds a year, will be ready for production by November 2007.
``In line with our strategy to optimize business opportunities, the added propylene capacity will provide opportunities for growth via direct sales or via investments in propylene derivatives, including polypropylene,'' Condon said.
Titan Chemicals also has incorporated a new subsidiary, Titan Trading Corp. Ltd., on March 3, with an authorized share capital of $10,000. It was incorporated in Labuan, the Malaysian freeport island off Borneo.