Indorama Ventures Public Company Limited (IVL) has agreed to acquire Brazil-based Oxiteno S.A. Indústria e Comércio, a subsidiary of Ultrapar Participações S.A. The acquisition gives IVL a unique portfolio in high-value surfactants and significantly extends its existing Integrated Oxides and Derivatives (IOD) business.
Substantial Growth Potential
Oxiteno is one of the leading integrated surfactants producers, catering to highly attractive end-use markets in LATAM. The acquisition brings an excellent management team, world-class expertise in green chemistry innovation, strong customer relationships in Brazil, Uruguay and Mexico, and substantial growth potential in attractive end markets, including the U.S. through a new facility in Pasadena, Texas. Oxiteno has a strong commitment to environmental governance, and its focus on lowering greenhouse gas emissions will also enhance IVL’s ESG credentials.
Through the acquisition, IVL will assume a unique market position in technologies catering to niche, IP-rich and value-added applications in home and personal care, agrochemicals, coatings and oil & gas markets. The surfactants market has seen consistent growth over the last decade, driven by trends in population growth, urbanization and increasing hygiene awareness amid the COVID-19 pandemic.
With 11 manufacturing plants, customers in four continents, and an experienced management team, Oxiteno will complement IOD’s footprint in the U.S and Latin America, while its five research and technology centers will add to IVL’s innovation credentials in green chemistry. The extended footprint has potential to drive expansion in Europe and Asia by leveraging on IVOX’s surfactants business in Australia and India and IVL’s global presence in 34 countries. IVL expects to realize synergies of USD 100 million by 2025 through portfolio adjustments, asset optimization and operational excellence.
Acquisition to Expand Market Reach
IVL will purchase Oxiteno for USD 1.3 billion (subject to adjustments at closing), with a deferred payment of USD 150 million in 2024. The transaction is subject to customary conditions to closing, including approval of relevant regulatory authorities. The transaction is expected to close in Q1 2022 and will be earnings accretive immediately. Financing is secured through deferred payment, using existing extra cash on our balance sheet, free cash flow generated from existing businesses, short term loans against working capital and the balance as long-term debt.
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This acquisition is a natural fit for us. We have a solid track record of continuously driving value for shareholders through successfully integrating 50 acquisitions over the past 20 years. With Oxiteno, we are creating a global leader in surfactants. By bringing our companies together, we are strengthening our customer value proposition, our market reach, and our experienced team. Like us, Oxiteno grew as a family enterprise with an entrepreneurial mindset. The combination of our teams is unmatched in our industry, and we look forward welcoming them to our family,” said Mr Aloke Lohia, IVL Group CEO.
Oxiteno and Indorama Ventures both have family-business origins and share a similar mindset, which positions people as a key business differentiator and values innovation and investments in an increasingly diversified and efficient portfolio.
Frederico Curado, CEO of Ultra Group, said, “
It is important to ensure that Oxiteno will benefit from integrating the new majority shareholder into the business, which is strategically positioned to lead the company through its growth path.” Mr D K Agarwal, chief executive officer of combined PET, IOD and fibers business, said, “
The combination of Oxiteno and IVL’s existing Integrated Oxides & Derivatives business is highly complementary. It gives us a presence in the high-growth Latin American markets, and we also become a more reliable supplier to our global customers, especially in Europe and the US. It will drive sustainable long-term value creation by accelerating our expansion in downstream chemicals, increasing our exposure to high-quality markets, and adding to our R&D and sustainability credentials. The portfolio will accelerate revenue and EBITDA growth and deliver cost synergies.”
Source: Indorama Ventures