KUALA LUMPUR (May 17): Petronas Chemicals Group Bhd (PetChem) is acquiring the entire equity interest in leading specialty chemicals group Perstorp Holding AB from Financière Forêt SARL for a base purchase of €1.538 billion (approximately RM7.018 billion) cash.
The acquisition marks the creation of a significant specialty chemicals portfolio, while enhancing its overall earnings, said PetChem, which together with its wholly-owned unit Petronas Chemicals International BV (PCIBV), had entered into a conditional securities purchase agreement with the seller for the proposed acquisition.
The Perstorp group currently derives more than 80% of its revenue from the 18 preferred chemical segments identified by PetChem, including surfactants, specialty polymers, specialty films, plastic additives, coatings, preservatives and biocides, and pre/pro biotics.
Perstorp has also developed a number of solutions such as the game-changing production of sustainable methanol from carbon dioxide, residue streams, biogas and green hydrogen at Stenungsund site to replace a large portion of its fossil-based methanol feedstock by 2026.
The price tag of €1.538 billion is based on an enterprise value (EV) of €2.3 billion minus adjusted net debt of €762 million.
The implied EV represents an EV/ebitda multiple of 8.3 times, which sits between comparable transactions of between 6.9 times and 15.7 times as well as below the average of 10.9 times.
Under the deal, PCIBV is required to pay a maximum of €45 million when Perstorp’s new pentaerythritol plant in Sayakha, India achieves mechanical completion, and the required permits to commence operations.
PCIBV is also required to repay all outstanding amounts owing by Perstorp group pursuant to certain existing financing agreements amounting to €851.7 million.
The Perstorp group has seven manufacturing sites and three research and development centres worldwide, with a diversified customer portfolio of more than 2,600 customers globally. Its top 10 customers represent 19% of the sales for the financial year ended 2021 (FY21).
In FY21, Perstorp recorded approximately €1.33 billion (RM6.54 billion) in revenue and €248 million (RM1.21 billion) in EBITDA with an EBITDA margin of 18.6%.
“PetChem’s existing supply of chemical/intermediates feedstock (for example olefins, methanol, n-butanol, acetic acid and syngas, among others) and industrial utilities will further support backward integration and create additional upside potential,” PetChem said.
“The Perstorp group’s unique combination of expertise in the development of proprietary processes and its ability to scale utilising its proprietary processes, chemistry, and implantation methods will greatly enhance PetChem’s current capabilities, thus reducing PetChem’s reliance on third party licensed technology,” it added.
In a statement, PetChem said the acquisition marks the creation of a significant specialty chemicals portfolio, while enhancing its overall earnings.
This follows the acquisition in 2019 of BRB Group, a leading global independent producer and formulator of silicones, lube oil additives and chemicals.
“Perstorp will add up to 2.3 million tonnes per annum (mtpa) to PetChem’s production capacity and contribute about 28% incremental revenue to PetChem on 2021 results as well as support PetChem’s medium-term goal of establishing 30% revenue generated from non-traditional businesses by 2030,” said PetChem managing director and CEO Mohd Yusri Mohamed Yusuf.
“This acquisition will also provide us with critical talent, know-how, technological platforms and proven customer channels to address the pressing needs of the market for more sustainable solutions,” he added.
PetChem, which will settle the transaction entirely via internally generated funds, had cash of RM16.39 billion as at end-2021.
The proposal will require shareholders' approval at an upcoming extraordinary general meeting of PetChem. It expects the deal to be completed in the second half of 2022.
Shares of PetChem closed up three sen or 0.3% to RM10.02, after touching an intra-day high of RM10.70 in the early session. Based on its closing price, the counter has a market capitalisation of RM80.16 billion.
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