The European Commission has approved the proposed acquisition of Lotte Chemical UK Ltd by petrochemicals giant Alpek, part of Mexican conglomerate Alfa Group.
In its decision, announced Dec. 4, the European Commission concluded that the proposed transaction would raise no competition concerns given the limited horizontal and vertical overlaps between the activities of the companies.
Lotte UK is active in the manufacture of polyethylene terephthalate (PET) resin while Alpek’s activities cover a range of areas including polyester, plastics and chemicals, aluminium auto components, refrigerated foods, and IT & telecoms.
Under the deal, which was disclosed late October, Alpek will acquire the UK subsidiary of Lotte Chemical Corp., including its 350 kiloton-per-annum (ktpa) polyethylene terephthalate (PET) facility in Wilton, in south-eastern UK.
The terms of the agreement have not been disclosed.
The move marks the Mexican firm’s first acquisition outside the Americas, raising the company’s PET capacity to 2.8 million tons a year.
"This acquisition is well aligned with Alpek’s growth strategy, creating substantial value by integrating the asset into our global polyester footprint," said José de Jesús Valdez, Alpek’s CEO at the time of the agreement. “Moving forward, our team is focused on executing a seamless integration to capitalize on existing momentum and capture synergies."
According to Gordon Haire, research director at London consulting firm Wood Mackenzie, the change of ownership also marked the exit of Lotte Chemical from PET manufacturing in Europe.
“It establishes a strong platform for Alpek to become a regional PET supplier in the European market,” he said.
The deal is also significant as it could have significant implications for regional PTA trade flows.
Lotte Chemical, Haire explained, exported around 110 ktpa of PTA from Korea to the UK over the last few years, while Alpek is also a long-established supplier into the European PTA market.
"Lotte Chemical has concluded that the UK PET business does not fit the Lotte Vision 2030. Instead, Lotte is likely to add more weight to the newly expanded PIA business and reduce exposure to PTA," Haire concluded.
Alpek is a leading petrochemical company operating two business segments of polyesters (PTA, PET and polyester fibers), and plastics & chemicals (polypropylene, expandable polystyrene, and other specialty and industrial chemicals).
The company is an integrated producer of PTA and PET in North America, with annual sales of $6.9 billion.
It operates 27 plants in the US, Mexico, Canada, Brazil, Argentina and Chile, and employs more than 5,700 people.