Ineos Group is entering ABS production, initially though a joint venture with Lanxess AG.
Ineos agreed to pay 35 million euros ($47.3 million) for a 51 percent stake in a new joint venture in which Lanxess will contribute its Lustran Polymers ABS business. The deal is expected to close in late September.
Two years after that, Ineos plans to buy out Lanxess' share of the venture, at terms to be based on the business's performance.
``The joint venture provides Ineos with strong market positions in a new portfolio of products that complement our styrenic, polyethylene, polypropylene and PVC plastics activities,'' Ineos Chairman Jim Ratcliffe said in a news release.
Ineos has been expanding its polymers portfolio through acquisitions and joint ventures. Most recently it acquired PVC, PP and low density PE operations in Norway. Earlier this year it expanded its PS joint venture with Nova Chemicals Corp. beyond Europe to include North America.
In its biggest deal to date, it bought British Petroleum plc's polyolefins business in 2005 for $9 billion.
The ABS joint venture, to be called Ineos ABS, will have 1.3 billion pounds of annual ABS production capacity, Ineos spokesman Richard Longden said in a telephone interview. That capacity will make it the third-largest supplier in the world, and Europe's leading supplier.
The venture will operate a plant in Addyston, Ohio, with annual capacity of 396 million pounds, as well as plants in Dormagen, Germany; Tarragona, Spain; Map Ta Phut, Thailand, and Vadodara, India. Annual sales are about 900 million euros ($1.21 billion).
Last year, under Lanxess, the ABS business recorded earnings before interest, taxes, depreciation and amortization and special charges of 16 million euros ($21.6 million). Lanxess predicts the business will have EBITDA of 40 million euros ($54 million) this year, excluding special charges. Ineos ABS will employ about 1,600.
Ineos has appointed Gerd Franken as designated chief executive officer of Ineos ABS. He currently is business director for Ineos Polyolefins and managing director for the Ineos plant in Kln, Germany.
``The transfer of this business unit to the joint venture, headed by Ineos, is a key milestone in Lanxess' realignment and offers both the Lustran Polymers business and its employees the best opportunities for further development,'' said Lanxess Chairman Axel Heitmann.
Lanxess' staged withdrawal from ABS comes two years after the company announced it would restructure its styrenic resins and fine chemicals units.
Longden said Ineos ABS will benefit from Ineos' ability to supply the monomers acrylonitrile, butadiene and styrene, most of which it makes in Europe. Lanxess spokesman Rudolf Eickeler said Lanxess does not own plants for the monomers. But he added that the lack of monomer assets was a small factor in deciding to cut back its ABS stake.
Lanxess said its pension obligations related to the ABS business amount to about 30 million euros ($40.5 million) and will be transferred to Ineos ABS.
Based in Leverkusen, Germany, Lanxess has its U.S. office in Pittsburgh. Worldwide sales were about 6.9 billion euros ($9.32 billion) in 2006.
Ineos' headquarters is in Lyndhurst, England. Its global annual sales amount to about $38 billion. Its Ineos Olefins & Polymers USA business unit is in League City, Texas.