Mexican petrochemical company Alpek SAB de CV is adding downstream operations by buying PET sheet maker and thermoformer Octal Holding for $620 million.
Alpek, based in Monterrey, already produces PET in addition to polyester and industrial and specialty chemicals. Currently, global demand for PET resin is strong, and the company says the acquisition will expand Alpek's presence in the PET sheet and thermoforming industries, adding more than 1 million metric tons of capacity.
"This transaction is ideal for Alpek. Through a single acquisition we get access to the growing and profitable segment of the PET sheet segment and serve our customers' increased PET resin demand," Alpek CEO José de Jesús Valdez said in a Feb. 1 news release.
Octal, based in Muscat, Oman, has a proprietary "direct-to-sheet" technology it calls DPET that allows it to move from raw materials to final packaging faster while also integrating recycled materials quickly. DPET reduces five steps in the recycling process and reduces the carbon footprint of PET packaging from its operations by 25 percent, the company says.
Its Octal Extrusion Corp. facility in West Chester, Ohio, takes recycled PET flake from its thermoforming customers in North America and extrudes the material into new sheet. That site opened in 2015 and expanded in 2019.
It was No. 98 in the most recent Plastics News ranking of North American film and sheet makers with an estimated $50 million in sales. Globally it has an estimated $800 million in annual sales. Octal has thermoforming operations in Saudi Arabia, processing 11,000 tonnes of packaging annually.
"PET sheet represents a highly attractive opportunity for Alpek, serving the growing needs for 100 percent recyclable packaging and providing solid margins in to-go meals, baked goods and produce, just to name a few," Alpek said in its release. "Growth rates through 2025 are also expected to be strong at 6.4 percent per year."
The transaction is being structured on a debt-free basis, with financing for the acquisition secured through cash available on Alpek's balance sheet, funds from its existing businesses and bank loans. No further details were provided.
Alpek has been making other acquisitions recently to build up its catalog and footprint. In 2019 it expanded into Europe with the acquisition of South Korea’s Lotte Chemical Corp.'s United Kingdom subsidiary. In 2020, it purchased Nova Chemicals Corp.'s expandable styrenics business.
In addition to boosting capacity and forward-integrating Alpek into the PET sheet business segment, it ticks other boxes as well.
Octal has operations that span four plants in Saudi Arabia, the U.S. and Oman. Octal boasts the largest integrated PET producing site in the world at any single location in Salalah, Oman. Alpek expects to capture global administrative and operational synergies through the integration of these sites into the existing asset base.