INDONESIA – Thai group Siam Cement Pcl is acquiring a 30% stake in Indonesia’s Chandra Asri Petrochemical Tbk (CAP) for US$442 million.
Siam Cement will buy - through its wholly owned unit SCG Chemicals - a 22.9% stake (or 701.34 million shares) from Apleton, a unit of Singapore state investor Temasek Holdings Pte Ltd, and the remaining 7.13% stake (or 218.52 million shares) from PT Barito Pacific Tbk, the holding company of Indonesian tycoon Prajogo Pangestu.
"The decision to sell 7.13% stake out of 72% that we have in Chandra Asri is a strategic one," said Barito Pacific Chief Executive Loeki Putra.
"With Siam Cement investment, we feel that we can collaborate the expertise from us and Siam in petrochemical. With the collaboration, we aim to expands our production to 1 million tonnes of naphtha cracker annually," he said.
CAP operates a facility at Ciwandan, Cilegon in Banten province, which has a current capacity is 600,000 tonnes. At the heart of CAP lies the Lummus Naphtha Cracker producing high quality Ethylene, Propylene, Crude C4 and Pyrolysis Gasoline (Py-gas) for the Indonesian as well as regional export markets.
It also has integrated polyethylene and polypropylene production facilities with a total of five reactors.
Of the four Unisol reactors designed by Union Carbide, one is capable of producing both linear low and high density PE resins while the other 3 are capable to produce a variety of PP resins.
The fifth reactor uses Showa Denko KK's revolutionary bimodal high density polyethylene technology
The deal highlights both the growing allure of Indonesia, Southeast Asia's biggest economy, and the strength of cash-rich Thai companies, many of which are turning overseas for growth to overcome limited opportunities at home.
Indonesian M&A volumes have more than doubled to US$11.6 billion so far this year from a year ago.
"This investment represents a unique opportunity for SCG Chemicals to invest in Indonesia's leading petrochemical franchise, with highly attractive market growth dynamics," Chief Financial Officer Chaovalit Ekabut said in a statement.
The transaction is expected to be completed this September. Barito will remain the controlling shareholder of CAP, while SCG Chemicals will become a non-controlling shareholder.
Earlier this year, Siam Cement revealed plans to invest US$4.9 billion between 2011 and 2015, mostly in acquisitions. The conglomerate, which focuses on three core businesses: cement, petrochemicals, paper and packaging, wants to boost its assets in Southeast Asia, with Indonesia being one of its main targets.
It already has interests in petrochemical plants in Indonesia and its subsidiary, Thai Plastic Chemicals Pcl , has a polyvinyl chloride (PVC) plant in the country with a capacity of 120,000 tonne a year.
Siam Cement also currently has plans for a US$3.5-4 billion petrochemical complex in Vietnam.