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The sale of the chemical industry Oxiteno — which belonged to Ultra group — to Indorama — leader in the Brazilian PET resin market — was concluded on Friday for $1.48 billion. This way, Indorama Ventures Public Company Limited (IVL) reached the top of the ranking among the ethylene oxide and surfactants producers in the Americas.
With annual sales of around $15 billion, not considering the most recent acquisition, the Thai company incorporated the company, a reference in innovation in the Brazilian chemical industry, in its integrated oxides and products division (IOD), with a strong portfolio complementarity. The synergies are estimated at $100 million.
Ahead of Oxiteno for the last 15 years, the executive João Parolin assumes the position of CEO of IVL’s IOD business for South America. All the company’s management is being repositioned in the new structure. “Oxiteno has a portfolio more focused on specialties and surfactants and accelerates Indorama’s innovation journey,” the executive told Valor. “It is an opportunity for portfolio enrichment.”
Oxiteno has a relevant presence in the agribusiness, personal and home care, paints and varnishes and oil and gas markets and operates 11 plants — 7 in South America and 4 in North America. The deal adds a new geography for the Thai group’s IOD division, which was already in North America, with ethylene oxide and surfactant production in the United States, but did not yet have operations in South America.
In Mr. Parolin’s evaluation, the incorporation by Indorama will strengthen Oxiteno, put up for sale by Ultrapar after reviewing its portfolio of assets. “It was a good solution”, he said. The Ultra group, which is also leaving pharmaceutical retail with the sale of Extrafarma to Pague Menos, plans to focus on power and infrastructure, keeping under its umbrella the fuel distributor Ipiranga, Ultracargo (storage of bulk liquids) and Ultragaz, distributor of liquefied petroleum gas (LPG).
Last year, Oxiteno traded 779,000 tonnes of specialty chemicals and commodities, up 3% compared to 2020. Net revenue jumped 36%, to R$7.1 billion, and Ebitda reached R$1.1 billion, the highest in its history.
According to Dilip Kumar Agarwal, CEO of IVL, the acquisition is in line with the group’s ongoing goal of doubling Ebitda every five years. “Based on our experience of completing about 50 acquisitions in 20 years, the quality of Oxiteno’s people and our shared values were important considerations,” he said in a statement. The group has three major business divisions: PET, polyester fibers and textiles, and IOD.
The transaction implies EV/Ebitda multiple of 6.3 times, considering the results for 2021. Indorama paid $1.33 billion to Ultra on Friday and another $150 million in April 2024. The final price exceeds the initially agreed total amount of $1.3 billion but is still subject to adjustments.
Source: Valor International