Epoxy
November 26, 2022
Wow
Brenntag Is Said to Explore Takeover of Chemicals Rival Univar
Michelle F. Davis, Kiel Porter and Aaron Kirchfeld, Bloomberg News
(Bloomberg) — Germany’s Brenntag SE is exploring a potential acquisition of US rival Univar Solutions Inc. that would cement its position as the world’s biggest chemical distributor and create a company with more than $30 billion in sales, people familiar with the matter said.
The two firms have held preliminary talks about the feasibility of a combination, the people said, asking not to be identified because the matter is private. If discussions go smoothly, Brenntag and Univar may decide as soon as the next couple months whether to proceed with a transaction, the people said.
Brenntag has declined 14% this year, valuing the Essen-based firm at €10.6 billion ($11 billion). Downers Grove, Illinois-based Univar is up more than 9%, giving it a market capitalization of more than $5 billion.
Deliberations are at a preliminary stage and there’s no certainty they will lead to a transaction, the people said. Representatives for Brenntag and Univar couldn’t immediately comment.
The potential tie-up would rank as a top three transaction in the chemical industry this year and mark a late bright spot for big cross-border dealmaking. Global mergers and acquisitions are down almost 30% this year to $2.4 trillion, according to data compiled by Bloomberg, hurt by economic headwinds and difficult financing markets.
While Brenntag is a serial acquirer of smaller assets, a Univar takeover would mark its largest purchase by far and be a bold move for Chief Executive Officer Christian Kohlpaintner. The German company unveiled a new growth plan earlier this month to “shape the future of its industry” including organic re-investments and “value creating M&A activities.”
Univar is no stranger to dealmaking itself. It merged with rival Nexeo Solutions Inc. in 2018 and then sold its plastics business in 2019. David Jukes has served as Univar’s CEO since 2018.
A combination would create an opportunity to boost growth and cut costs, but could also face tough antitrust reviews as national governments more closely scrutinize sector tie-ups.
Brenntag reported $20.3 billion of sales over the trailing 12 months, compared with $11.4 billion at Univar, according to data compiled by Bloomberg. The German company is the global market leader in chemical and ingredients distribution with over 17,000 employees in 78 companies, according to its website.
Univar boasts one of the industry’s largest private transportation fleets as well as a sales force and logistics team that helps connect chemical makers and buyers across sectors.
–With assistance from Eyk Henning and Dinesh Nair.
©2022 Bloomberg L.P.
https://www.bnnbloomberg.ca/brenntag-is-said-to-explore-takeover-of-chemicals-rival-univar-1.1851291
November 26, 2022
Wow
Brenntag Is Said to Explore Takeover of Chemicals Rival Univar
Michelle F. Davis, Kiel Porter and Aaron Kirchfeld, Bloomberg News
(Bloomberg) — Germany’s Brenntag SE is exploring a potential acquisition of US rival Univar Solutions Inc. that would cement its position as the world’s biggest chemical distributor and create a company with more than $30 billion in sales, people familiar with the matter said.
The two firms have held preliminary talks about the feasibility of a combination, the people said, asking not to be identified because the matter is private. If discussions go smoothly, Brenntag and Univar may decide as soon as the next couple months whether to proceed with a transaction, the people said.
Brenntag has declined 14% this year, valuing the Essen-based firm at €10.6 billion ($11 billion). Downers Grove, Illinois-based Univar is up more than 9%, giving it a market capitalization of more than $5 billion.
Deliberations are at a preliminary stage and there’s no certainty they will lead to a transaction, the people said. Representatives for Brenntag and Univar couldn’t immediately comment.
The potential tie-up would rank as a top three transaction in the chemical industry this year and mark a late bright spot for big cross-border dealmaking. Global mergers and acquisitions are down almost 30% this year to $2.4 trillion, according to data compiled by Bloomberg, hurt by economic headwinds and difficult financing markets.
While Brenntag is a serial acquirer of smaller assets, a Univar takeover would mark its largest purchase by far and be a bold move for Chief Executive Officer Christian Kohlpaintner. The German company unveiled a new growth plan earlier this month to “shape the future of its industry” including organic re-investments and “value creating M&A activities.”
Univar is no stranger to dealmaking itself. It merged with rival Nexeo Solutions Inc. in 2018 and then sold its plastics business in 2019. David Jukes has served as Univar’s CEO since 2018.
A combination would create an opportunity to boost growth and cut costs, but could also face tough antitrust reviews as national governments more closely scrutinize sector tie-ups.
Brenntag reported $20.3 billion of sales over the trailing 12 months, compared with $11.4 billion at Univar, according to data compiled by Bloomberg. The German company is the global market leader in chemical and ingredients distribution with over 17,000 employees in 78 companies, according to its website.
Univar boasts one of the industry’s largest private transportation fleets as well as a sales force and logistics team that helps connect chemical makers and buyers across sectors.
–With assistance from Eyk Henning and Dinesh Nair.
©2022 Bloomberg L.P.
https://www.bnnbloomberg.ca/brenntag-is-said-to-explore-takeover-of-chemicals-rival-univar-1.1851291
November 2, 2022
Green Epichlorohydrin Project in Sarawak
RM1.7 bln epichlorohydrin manufacturing plant project in Samalaju holds groundbreaking
By Yunus Yussop on November 2, 2022, Wednesday at 3:43 PM Sarawak
Awang Tengah (sixth right) and other guests perform the groundbreaking at Samalaju Industrial Park.
SAMALAJU (Nov 2): The proposed RM1.7 billion epichlorohydrin (ECH) manufacturing plant project in Samalaju Industrial Park held its groundbreaking ceremony today.
The project is a joint venture investment by OCiKumho Sdn Bhd and Korea Kumho Petro Chemical Group.
Deputy Premier Datuk Amar Awang Tengah Ali Hasan said at a time of uncertainties due to global geopolitics and the economy, OCI and Kumho’s investment is very much welcomed.
“This latest investment from OCI and Kumho in Samalaju Industrial Park is a testament to the high level of confidence investors have in the Sarawak GPS (Gabungan Parti Sarawak) government,” he said when officiating at the event on behalf of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.
He said the project is in line with Sarawak’s Post Covid-19 Development Strategy 2030, which encourages more development in green and renewable industries so that Sarawak can contribute to the national aspiration of a low-carbon and eventually carbon-neutral society by 2050.
When operational, the new plant will produce ECH through hydroelectric power with bio-glycerin and natural salts.
ECH is an important raw material in the manufacture of epoxy used in coating applications in all industrial fields such as shipbuilding, automobiles, IT, construction, and civil engineering.
Awang Tengah said OCI Group will also expand its chlor-alkali production.
OCI has invested more than RM8 billion to produce solar grade polysilicon in Sarawak, creating employment and business opportunities for locals.
Besides the current expansions by investors in Samalaju and Sama Jaya in Kuching, Awang Tengah said there are several new investors who are negotiating with the Sarawak government on proposed projects.
“These investors are attracted to the green hydropower potential of Sarawak to produce green products such as steel, hydrogen, and components for EV batteries, as the world moves towards more sustainable development,” he said.
He pointed out Sarawak remains as an attractive location for investment, ranking among the top destinations for investment in manufacturing projects in Malaysia.
“Despite the pandemic, Sarawak managed to attract a total investment of RM23.17 billion, with RM16.08 billion approved in 2020 and RM7.09 billion in 2021,” he said.
He said for Samalaju Industrial Park, RM21 billion was invested by international investors and, in turn, this generated RM4.6 billion last year in spin-offs for the local economy (2020: RM4.05 billion).
“Total employment created was 7,800 in 2021 (2020: 6,600) as well as wages paid amounting to RM425 million (2020: RM342 million).
“In 2021, Samalaju Industrial Park recorded total exports of RM13.9 billion (2020: RM9.4 billion),” added Awang Tengah, who is Minister for International Trade, Industry and Investment.
Among those present at the ceremony were Deputy Minister for International Trade, Industry and Investment Datuk Dr Malcolm Mussen Lamoh, ministry advisor (SME) Datuk Mohamad Naroden Majais, ministry acting permanent secretary Dzulkornain Masron, OCI Group chairman Baik Woo Sug, and Korea Kumho Petro Chemical Group chairman Park Chan Koo.
November 2, 2022
Green Epichlorohydrin Project in Sarawak
RM1.7 bln epichlorohydrin manufacturing plant project in Samalaju holds groundbreaking
By Yunus Yussop on November 2, 2022, Wednesday at 3:43 PM Sarawak
Awang Tengah (sixth right) and other guests perform the groundbreaking at Samalaju Industrial Park.
SAMALAJU (Nov 2): The proposed RM1.7 billion epichlorohydrin (ECH) manufacturing plant project in Samalaju Industrial Park held its groundbreaking ceremony today.
The project is a joint venture investment by OCiKumho Sdn Bhd and Korea Kumho Petro Chemical Group.
Deputy Premier Datuk Amar Awang Tengah Ali Hasan said at a time of uncertainties due to global geopolitics and the economy, OCI and Kumho’s investment is very much welcomed.
“This latest investment from OCI and Kumho in Samalaju Industrial Park is a testament to the high level of confidence investors have in the Sarawak GPS (Gabungan Parti Sarawak) government,” he said when officiating at the event on behalf of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.
He said the project is in line with Sarawak’s Post Covid-19 Development Strategy 2030, which encourages more development in green and renewable industries so that Sarawak can contribute to the national aspiration of a low-carbon and eventually carbon-neutral society by 2050.
When operational, the new plant will produce ECH through hydroelectric power with bio-glycerin and natural salts.
ECH is an important raw material in the manufacture of epoxy used in coating applications in all industrial fields such as shipbuilding, automobiles, IT, construction, and civil engineering.
Awang Tengah said OCI Group will also expand its chlor-alkali production.
OCI has invested more than RM8 billion to produce solar grade polysilicon in Sarawak, creating employment and business opportunities for locals.
Besides the current expansions by investors in Samalaju and Sama Jaya in Kuching, Awang Tengah said there are several new investors who are negotiating with the Sarawak government on proposed projects.
“These investors are attracted to the green hydropower potential of Sarawak to produce green products such as steel, hydrogen, and components for EV batteries, as the world moves towards more sustainable development,” he said.
He pointed out Sarawak remains as an attractive location for investment, ranking among the top destinations for investment in manufacturing projects in Malaysia.
“Despite the pandemic, Sarawak managed to attract a total investment of RM23.17 billion, with RM16.08 billion approved in 2020 and RM7.09 billion in 2021,” he said.
He said for Samalaju Industrial Park, RM21 billion was invested by international investors and, in turn, this generated RM4.6 billion last year in spin-offs for the local economy (2020: RM4.05 billion).
“Total employment created was 7,800 in 2021 (2020: 6,600) as well as wages paid amounting to RM425 million (2020: RM342 million).
“In 2021, Samalaju Industrial Park recorded total exports of RM13.9 billion (2020: RM9.4 billion),” added Awang Tengah, who is Minister for International Trade, Industry and Investment.
Among those present at the ceremony were Deputy Minister for International Trade, Industry and Investment Datuk Dr Malcolm Mussen Lamoh, ministry advisor (SME) Datuk Mohamad Naroden Majais, ministry acting permanent secretary Dzulkornain Masron, OCI Group chairman Baik Woo Sug, and Korea Kumho Petro Chemical Group chairman Park Chan Koo.
October 27, 2022
Olin Earnings Call Epoxy Highlights
Olin Corp (OLN) Q3 2022 Earnings Call Transcript
Oct. 27, 2022 12:33 PM ETOlin Corporation (OLN)
Q3: 2022-10-26 Earnings Summary
EPS of $2.15 beats by $0.30 | Revenue of $2.32B (-0.79% Y/Y) misses by $26.01M
Olin Corp (NYSE:OLN) Q3 2022 Earnings Conference Call October 27, 2022 9:00 AM ET
Company Participants
Steve Keenan – Director, IR
Scott Sutton – President, CEO & Chairman
Todd Slater – SVP & CFO
Scott Sutton
Thanks, Steve, and good morning to everyone. The Olin team is all about delivering on opportunities. We have 2 major opportunities before us. I’ll start with opportunity, number one. We are experiencing recessionary conditions, and the opportunity is to show Olin will perform remarkably different than history may indicate. Over the next 4 quarters, we forecast delivering more than $1.1 billion of levered free cash flow.
This is remarkably different. Don’t worry that we had to pull back from the EDC market, while prices cratered, creating a major PBC value morass and don’t worry that we had to optimize our epoxy participation to support our advanced partners while Asia liquidity temporarily lowered others. These necessary activities are respectful of our core theme to focus on value, set our market participation based on the weak side of the ECU and by liquidity where necessary to lift the value of the ECU, which we did in the third quarter.
Kevin McCarthy
And then I know you’re throttling back on volumes in an effort to support the market. That effort appears to be succeeding. But Nevertheless, can you talk about what your operating rates were in the quarter in chlor alkali and epoxy and how you see that utilization progressing here October?
Scott Sutton
Yes. Well, maybe instead of all of those operation rates, I’ll at least share with you what we’re doing in epoxy if you were to think about the equivalent operating rates, all of our resin production facilities, we’re running below 50% there in order to preserve value. And remember, our recession case said that we could move the whole company down to that level. And so I would just say we have plenty of room left across the rest of the company to make our recession prediction come true.
Hassan Ahmed
I just wanted to revisit the Q4 guidance, particularly in light of recessionary conditions and the like. I mean, look, I understand Q4 tends to be seasonally weak. You guys have consistently talked about certain sort of markets, be it EDC, be epoxy conditions over there being even below trough conditions.
But if I were to annualize the lower end of your Q4 guidance, I still come up with, call it, $1.75 billion in EBITDA, which obviously is kind of the midpoint of the $1.5 billion to $2 billion of the guidance range for a trough that you guys have given. So with the conditions evolving the way they are, I mean I just wanted to sort of get your take on how comfortable you guys continue to be with that trough EBITDA guidance range.
Scott Sutton
Yes. I mean, look, I mean, it’s still our guidance range. And in fact, it’s been our guidance range now for the last 3 quarters as we’ve really been preparing this window to show that Olin delivers a different level of free cash flow than we did before. I will say, of course, I understand annualized in the fourth quarter, and you’re right, get exactly to that conclusion, even though the fourth quarter has traditionally weak factors on top of all the extraordinary factors that are going on in the world right now. I will just again sort of caution that we may experience 1 or 2 quarters that are lower than that in order to set the value equation right for the rest of the year, though.
I mean we’re not going to hesitate to take the proper actions in advance to make sure that value doesn’t decline. We’re not having to do that yet, but it could certainly happen as the recession plays out.
Michael Sison
Just curious in terms of your — the volume declines in cab and epoxy down with 1729. What do you think the fundamental volume declines are? And I guess the one way to think about it, too, is if your volumes are flat and your ECU PCI did improve, would your EBITDA — could that — should that have been up year-over-year?
Scott Sutton
Yes. And so if you — Mike, if you’re asking about sort of what’s the fundamental decline in the marketplace, it’s likely to be less than the decline in Olin volumes because remember, Olin tends to eat those shortfalls in demand from a production standpoint. We may not completely eat it from a sales standpoint because we go out and buy liquidity out of the marketplace at that moment, to fill in that gap a little bit. So you’re going to see our production down more than the decline in the marketplace, you’ll still see our sales volume down more than the decline in the marketplace, but our sales volume declines aren’t as big as our production volume declines.
Unidentified Analyst
It’s Chris Perrella on for Josh. The — I was curious as to what you’ve done to hedge out natural gas costs into the fourth quarter and out to next year and at what level?
Todd Slater
Yes. Chris, this is Todd. We are, as you know, an active hedger for natural gas as that’s directionally about 70% of our fuel source for power. We — a quarter out, we are very heavily hedged and generally have a rolling 4-quarter program. So you can imagine that we have a portion of 2023 already covered with active hedges.
Unidentified Analyst
All right. And then to your earlier comments about flexing down the chlor alkali rate to protect value and cash flow on the shoulder seasons. Is the expectation for that to sort of hold the chlor-alkali rate, your operating rate steady into the first quarter, assuming EDC and epoxy stays where they are now?
Scott Sutton
Well, look, without getting too specific, Chris, I would just say that there’s going to be shifts and changes in our production rate relative to the liquidity that we buy out of the marketplace. And we’ve already said that limited our participation in the vinyls chain. And it’s certainly not impossible that we choose to limit that participation even further as we enter 2023.
Operator
The next question is from Matthew Blair with TPH.
Matthew Blair
I had a question on the epoxy feedstocks. It looks like propylene and benzene are coming down quite a bit in Q4. Would that be a feedstock benefit to epoxy in Q4? Or do you have hedges and to really think about this as potentially flowing through into 2023?
Todd Slater
Matthew, this is Todd. As we think about — especially in North America, the costs have come down from the third quarter. And therefore, that does lower our costs. But once you start around the globe on an international basis, those lower costs really, you’ll see that benefit in Epoxy in the first quarter.
Unidentified Analyst
That’s helpful. And then my follow-up is just on the epoxy market. Have you seen any change in behavior since the end of September, either in terms of buying dynamics or selling dynamics?
Scott Sutton
I would say the same principal trend stays in place. With the China demand shortfall, but yet still running at expanding assets there. We’ve seen traditional trade flows temporarily reversed. So a lot of that material is ending up either in the U.S. or Europe or a lot of material that used to be produced in other countries in Asia and used to — for import into China is coming to the U.S. and Europe. And that really hasn’t changed.
I would say that the good news is there’s been some moderation of the rate of change there. And so there’s some stability there, and we’ve settled with a group of advanced customers that value the Olin solution and also value the fact that our epoxy resin carries a CO2 footprint that’s probably below the CO2 footprint of all that material that’s making its way out of China. So there’s some moderation there.
https://seekingalpha.com/article/4549910-olin-corp-oln-q3-2022-earnings-call-transcript
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