Thailand’s PTT Global Chemical PCL is to acquire Allnex Holding GmbH, a European specialty chemicals maker, for 4 billion euros (US$4.75 billion) to scale up its presence in the high-value chemicals products.
PTT Global would acquire 100 percent common stocks of Allnex Holding for 132.6 billion baht (US$4.1 billion) and also assume 426 million euros of loans, it said in an exchange filing yesterday.
The company would finance the acquisition through its own cash and with support from its parent PTT PCL, it said.
“PTT Global has so much excess cash that would help fund their aggressive expansion and acquisitions,” Krungsri Securities Co analyst Naphat Chantaraserekul said. “The acquisition cost looks high from our review of Allnex’s recent earnings.”
PTT Global shares tumbled as much as 7.3 percent to 54.25 baht in Bangkok trading, the biggest intraday decline since June last year. Shares of PTT, Thailand’s biggest company by market value, rose 0.7 percent to 37.50 baht by 11:37am local time.
PTT Global and its main local rivals — Indorama Ventures PCL and Siam Cement PCL — have stepped up overseas acquisitions and investments in the past few years to expand their production of chemical materials used for plastic packaging, bottles and other products.
PTT Global’s Allnex purchase would be the biggest overseas acquisition by a Thai company since Thai Beverage PCL’s takeover of Fraser and Neave Ltd in 2012, according to data compiled by Bloomberg.
Global refiners have been making inroads into the plastic and specialty chemical sectors in search of better profit margins. With the rising electrification of cars and a slowdown in oil-demand growth, more fuel producers across China and India are also turning their focus to petrochemicals rather than gasoline and diesel.
Petrochemicals are set to be the biggest source of oil-demand growth over the medium term, overshadowing an increase in transport fuels consumption, according to the International Energy Agency.
Demand for raw materials used to make petrochemicals — namely ethane, liquefied petroleum gas and naphtha — is expected to expand through 2026, it wrote in a report.
PTT Global expects to complete the transaction in December. The company signed an agreement with PTT, the state-controlled energy giant, for as much as 73.9 billion baht of loans to fund its investment in high-value business, it said in a separate statement.
The two-year loan would have an interest rate of as much as 2.5 percent a year, it said.
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