Mergers & Acquisitions
March 4, 2020
Wanhua Sets Up JV
Wanhua Chemical Gains After Unveiling Fujian Polyurethane Raw Material JV
(Yicai Global) March 4 — Wanhua Chemical Group’s shares rose after the company said it will form a joint venture with a petrochemicals maker under the Fujian government to build a polyurethane raw material plant in the Chinese province.
Wanhua Chemical’s stock [SHA:600309] climbed as much as 2.4 percent in Shanghai before ending the day 1.2 percent higher at CNY49.90 (USD7.19).
The chemicals giant will contribute CNY2.4 billion (USD344.7 million) in cash, 80 percent of the total investment, to the project with Fujian Petrochemical Group, the Shandong province-based company said in a statement late yesterday. The new plant will turn out 400,000 tons of methylenediphenyl diisocyanate and 400,000 tons of polyvinyl chloride a year.
MDI is one of the main raw materials used in the production of polyurethane. Wanhua Chemical’s market share exceeds 20 percent of total global demand of about 7 million tons, public records show.
The JV will acquire a 64 percent stake in the MDI project firm Fujian Cornell Polyurethane for free, and the stake of Cornell Polyurethane’s original actual controller will drop to 16 percent.
Chematur Technologies
Cornell Polyurethane’s former major shareholder sold its MDI assets to Wanhua Chemical for CNY925 million (USD132.9 million) last July, including all of its stake in well-known MDI production technology services provider Chematur Technologies, and pledged to transfer the Fujian MDI project’s development rights to Wanhua Chemical.
Founded in 2017, Cornell Polyurethane planned to build an MDI project with an annual capacity of 800,000 tons for CNY12.6 billion. The first phase, with a total investment of CNY6.6 billion and an annual capacity of 400,000 tons, was scheduled to go into operation in October, but construction work has made no progress since the project secured government approval.
As part of the deal to build the JV, Wanhua Chemical agreed that Fujian Petrochemical adds the toluene diisocynate and PVC production equipment of its subsidiary Fujian Southeast Electrochemical into the JV in exchange for a 20 percent stake. TDI is another important raw material for polyurethane production.
The JV will launch MDI production lines, expand the annual TDI capacity to 250,000 tons and build a PVC plant with an annual capacity of 400,000 tons. In addition, Wanhua Chemical will take a 49 percent stake in Southeast Electrochemical to boost its caustic soda output.
Southeast Electric, which specializes in chlorine and alkali chemical production and auxiliary thermoelectric supply, will provide raw materials and supporting utilities for the MDI and TDI projects, the statement said, without revealing the investment amount for the projects.
Editor: Peter Thomas
https://www.yicaiglobal.com/news/wanhua-chemical-gains-after-unveiling-fujian-polyurethane-raw-material-jv
March 4, 2020
Wanhua Sets Up JV
Wanhua Chemical Gains After Unveiling Fujian Polyurethane Raw Material JV
(Yicai Global) March 4 — Wanhua Chemical Group’s shares rose after the company said it will form a joint venture with a petrochemicals maker under the Fujian government to build a polyurethane raw material plant in the Chinese province.
Wanhua Chemical’s stock [SHA:600309] climbed as much as 2.4 percent in Shanghai before ending the day 1.2 percent higher at CNY49.90 (USD7.19).
The chemicals giant will contribute CNY2.4 billion (USD344.7 million) in cash, 80 percent of the total investment, to the project with Fujian Petrochemical Group, the Shandong province-based company said in a statement late yesterday. The new plant will turn out 400,000 tons of methylenediphenyl diisocyanate and 400,000 tons of polyvinyl chloride a year.
MDI is one of the main raw materials used in the production of polyurethane. Wanhua Chemical’s market share exceeds 20 percent of total global demand of about 7 million tons, public records show.
The JV will acquire a 64 percent stake in the MDI project firm Fujian Cornell Polyurethane for free, and the stake of Cornell Polyurethane’s original actual controller will drop to 16 percent.
Chematur Technologies
Cornell Polyurethane’s former major shareholder sold its MDI assets to Wanhua Chemical for CNY925 million (USD132.9 million) last July, including all of its stake in well-known MDI production technology services provider Chematur Technologies, and pledged to transfer the Fujian MDI project’s development rights to Wanhua Chemical.
Founded in 2017, Cornell Polyurethane planned to build an MDI project with an annual capacity of 800,000 tons for CNY12.6 billion. The first phase, with a total investment of CNY6.6 billion and an annual capacity of 400,000 tons, was scheduled to go into operation in October, but construction work has made no progress since the project secured government approval.
As part of the deal to build the JV, Wanhua Chemical agreed that Fujian Petrochemical adds the toluene diisocynate and PVC production equipment of its subsidiary Fujian Southeast Electrochemical into the JV in exchange for a 20 percent stake. TDI is another important raw material for polyurethane production.
The JV will launch MDI production lines, expand the annual TDI capacity to 250,000 tons and build a PVC plant with an annual capacity of 400,000 tons. In addition, Wanhua Chemical will take a 49 percent stake in Southeast Electrochemical to boost its caustic soda output.
Southeast Electric, which specializes in chlorine and alkali chemical production and auxiliary thermoelectric supply, will provide raw materials and supporting utilities for the MDI and TDI projects, the statement said, without revealing the investment amount for the projects.
Editor: Peter Thomas
https://www.yicaiglobal.com/news/wanhua-chemical-gains-after-unveiling-fujian-polyurethane-raw-material-jv
March 3, 2020
Future Foam Announcement on New Facility Acquisitions
On March 2,2020, Future Foam acquired polyurethane foam pouring facilities in Tupelo
Mississippi, Kent, Washington, Elkhart, Indiana, and a foam fabrication facility in Kent,
Washington. This is a very exciting event at Future Foam, and we are thrilled to take
over the operations and begin serving these markets.
Future Foam is a family-owned company that has been making polyurethane foam since
1958. We pride ourselves on customer service, quality and innovation. We are a team
of innovators guided by a passion to continually develop customer-driven solutions. We
employ, manufacture and invest where our customers conduct their business. We attract
and retain the best in the industry by providing a great place to work. With the addition of
these 4 facilities, we have 30 facilities in the United States, 1 in Europe, and 1 in China.
Ow 2 Million+ square feet of manufacturing and warehousing space is powered by more
than 2,000 associates, with an average tenure of 10 years.
We have foam pouring, molding, fabrication. and converting operations that provide
solutions that range from providing raw materials, OEM components, finished goods
and fulfillment services to our customers.
Our polyurethane foam product offering includes visco-elastic memory, conventional
ether, engineered ether and ester, high resiliency, molded, rebonded, and specialty
comfort foams along with cushioning products for carpet and flooring.
We are one of the leading foam recyclers in the world. Our Industrial by-product recyling
volume used to make rebond foam offsets and is roughly equivalent to our consumption
of chemical raw materials used in our foam production.
March 3, 2020
Future Foam Announcement on New Facility Acquisitions
On March 2,2020, Future Foam acquired polyurethane foam pouring facilities in Tupelo
Mississippi, Kent, Washington, Elkhart, Indiana, and a foam fabrication facility in Kent,
Washington. This is a very exciting event at Future Foam, and we are thrilled to take
over the operations and begin serving these markets.
Future Foam is a family-owned company that has been making polyurethane foam since
1958. We pride ourselves on customer service, quality and innovation. We are a team
of innovators guided by a passion to continually develop customer-driven solutions. We
employ, manufacture and invest where our customers conduct their business. We attract
and retain the best in the industry by providing a great place to work. With the addition of
these 4 facilities, we have 30 facilities in the United States, 1 in Europe, and 1 in China.
Ow 2 Million+ square feet of manufacturing and warehousing space is powered by more
than 2,000 associates, with an average tenure of 10 years.
We have foam pouring, molding, fabrication. and converting operations that provide
solutions that range from providing raw materials, OEM components, finished goods
and fulfillment services to our customers.
Our polyurethane foam product offering includes visco-elastic memory, conventional
ether, engineered ether and ester, high resiliency, molded, rebonded, and specialty
comfort foams along with cushioning products for carpet and flooring.
We are one of the leading foam recyclers in the world. Our Industrial by-product recyling
volume used to make rebond foam offsets and is roughly equivalent to our consumption
of chemical raw materials used in our foam production.
March 2, 2020
Chemical M&A Forecast
Deloitte Global Report Forecasts Robust M&A Activity for Chemical Industry in 2020
The Deloitte Global Chemical Industry Mergers and Acquisitions Outlook (2020 Outlook) expects robust merger and acquisition (M&A) activity to continue throughout the coming year, despite the trade and geopolitical tensions, and slowing economies that shape today’s global economic uncertainty.
“Over the past few years we watched attentively as the chemical industry maintained healthy M&A activity levels despite the many challenges,” says Bart Cornelissen, Energy & Resources Leader and Managing Partner of Monitor Deloitte in the Middle East. “The focus has remained on growth and profitability through it all. It seems that the chemical industry has become more comfortable operating in the uncertainty which may now be considered the ‘new normal’. Given the drive by GCC oil and gas companies towards downstream, we expect to see inorganic growth as essential to deliver upon their strategies.”
One trend the 2020 Outlook sees shaping the M&A landscape is the continued integration of traditional oil and gas companies with petrochemical firms, as chemical production is becoming an increasingly important end-use. Another trend is increased sustainability concerns that are changing how chemical companies view their business models, leading to non-traditional alliances, partnerships, and joint ventures.
Private equity has experienced a resurgence since 2018 as an important component of acquisition transactions. Private equity groups are expected to play a renewed critical role in chemicals M&A by providing capital, acquiring assets, and building companies through consolidation.
“The global economy appears able to support continued M&A activity, and the fundamentals for M&A activity in the chemical industry in particular continue to be strong as well,” says Cornelissen. “Companies are searching for growth and a larger global footprint, along with efficiency in their operations and innovation in their solutions. There are many opportunities to create value through M&A.”
“The ongoing monetization of domestic assets in the Middle East will continue to support the diversification of portfolios to international markets, with the benefit of further securing long term product placement,” said Lawrence Hunt, Partner, M&A Consulting, Deloitte Middle East.
The following are snapshots of M&A activity by geography, as outlined in the 2020 Outlook:
- The United States remains the most active market for M&A transactions. Foreign buyers remain very interested in US assets, and portfolio management will continue to be an important theme for US companies.
- China is home to the world’s largest base chemicals capacity, and given the current adjustments in the Chinese economy there may be acquisition opportunities for foreign buyers, although not at a bargain.
- In the United Kingdom, Brexit uncertainty undermines business confidence, and M&A activity has been relatively flat. Expect continued caution, even though debt is inexpensive and potential players have cash to deploy.
- In Germany, growing concerns around a possible economic downturn could lead to a mild slowdown in M&A activity, especially as regulatory scrutiny has tightened significantly in Europe.
- India has a strong long-term growth outlook and has made a variety of tax and regulatory reforms friendly to the chemical industry. The industry is also enjoying increased domestic consumption across all sub-sectors.
- In the Netherlands, the economic climate remains strong, debt is inexpensive, and many companies have had strong earnings in recent years. However, disappointing earnings and uncertainty could challenge chemical M&A activity in the Netherlands.
- In Japan, many leading chemical companies saw a downturn in 2019 for a variety of reasons. Nonetheless, companies have a need to accelerate portfolio transformation, and M&A ambitions are projected to remain high.
Brazil should see growth in M&A activity due to several economic factors, including chemical plant profitability and low interest rates. In addition, the Brazilian government’s privatization agenda may help drive deals.
https://www.albawaba.com/business/pr/deloitte-global-report-forecasts-robust-ma-activity-chemical-industry-2020-1342313
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