Mexican PVC and specialty chemicals maker Mexichem SA de CV plans to make a second acquisition in the United States this year, after buying Bayshore Vinyl Compounds Inc. of Tennent, N.J., for $16 million in the first quarter.
According to Enrique Ortega, director of investor relations for publicly owned Mexichem, the purchase of Bayshore is part of a strategy of making Mexichem a major player in Latin America.
Ortega said Mexichem has hired an investment banker, which he declined to identify, to pursue additional opportunities, adding that ``possibly by the end of the year we will make an additional acquisition in the United States.''
Mexichem, headquartered in Mexico City, said in its first-quarter report that it plans to invest $400 million over 36 months. In addition to the U.S. expansion plan, the company said it may add to its salt and fluorite mining business.
Bayshore makes flexible and rigid PVC compounds, and posted 2005 sales of $25 million. Ortega said the price paid for Bayshore was fair because the acquired company's management ``had the profile we need to continue with this [expansion] strategy in the U.S.''
He said the deal makes sense because Mexichem makes PVC resin and plasticizers, while Bayshore buys both to make compounds.
``Now we are a U.S. producer, and the idea is to continue integrating facilities in different regions of the U.S. with the idea of growing [Bayshore's] market and facilities,'' he said.
Mexichem was originally known as Grupo Industrial Camesa SA de CV, a joint venture whose owners included Camesa (whose holding company was Grupo Empresarial Kaluz), Autofina Chemicals Inc., Delaware Chemicals Corp. and Pennwalt SA de CV.
In 2004, the company bought Grupo Primex SA de CV, the largest PVC manufacturer in Latin America, producing 914.9 million pounds per year. The following year it sold its steel operations and changed its name to Mexichem before raising fresh capital by selling 63.5 million shares in the company on the Mexico City Stock Exchange.
Mexichem reported sales of 8.9 billion pesos ($856 million) in the 12 months ended March 31, of which 84 percent came from sales of vinyl chloride and 16 percent from fluorite.
Ortega is optimistic about the petrochemical industry's future in Mexico, citing Pemex Petroquimica SA's plans to expand in ethylene, among other projects.
``We are confident that the petrochemical segment will open up in Mexico, and we want to be here when it opens to private investors. Independent of who wins the [July] elections in Mexico, the segment will be opened up. We don't expect drastic changes in the macro economy.''
Asked whether Mexico one day will be self-sufficient in petrochemicals, Ortega replied: ``Mexico has enough natural resources to produce cheaper natural gas, and once the changes are made to the investment laws, things will change and give an impulse to the chemical and petrochemical industries. Logistics in chemicals and petrochemicals are very important. We are seeing that Mexico could be a very good place in which to make this investment.''