Dow-DuPont beset by delays as EU demands missing deal information

MOSCOW (MRC) -- Dow Chemical Co. and DuPont Co. face further delays to their plan to create the world’s biggest chemical company after the European Commission demanded more information about the USD59 billion tie-up, reported Bloomberg.

The European Union’s merger regulator "stopped the clock" in its in-depth investigation on Oct. 13, the watchdog said in an e-mail on Friday. This happens "if the parties do not provide an important piece of information that the commission has requested."

Dow-DuPont, the first of a trio of mega-deals reshaping the agrichemicals industry, is embroiled in an extended probe by the EU over concerns that the combination may reduce competition for crop protection, seeds and some petrochemicals. The EU is separately examining China National Chemical Corp.’s bid for Switzerland’s Syngenta AG.

The EU move is a re-run of a previous suspension that already delayed the regulator’s Dow-DuPont probe by nearly a month. The extra suspension led analysts at Sanford C. Bernstein & Co. to lower the probability of the deal closing from 85% to 75%.

"While we still believe the deal should close, it is becoming increasingly probable that the" commission "is slow-walking this deal," Jonas Oxgaard, a New York-based analyst at Bernstein said in a note. It "likely delays the closure of the deal date to sometime in late March 2017."

Dow said in a statement Friday that it always expected a "thorough review" and both companies are working with the EU and other regulatory agencies. The deal is expected to close in the first quarter of 2017, the company said.

Dow Chief Executive Officer Andrew Liveris said last month that the merger may be delayed until February from a planned closing late this year, as European antitrust officials take more time to consider potential competition issues in pesticides and crop seeds. Liveris said the value created by the deal made the wait worthwhile.

EU Competition Commissioner Margrethe Vestager has raised concerns that the agrichemicals industry is "quite concentrated already" and she’ll ensure that farmers have affordable prices and a choice of providers. EU lawmakers and environmental campaigners have been calling on her to block Bayer AG’s bid for Monsanto Co.

Regulators twice stopped the clock on their review of Halliburton Co.’s bid to buy oil-services rival Baker Hughes Inc. earlier this year, saying they needed more information from the companies. The firms abandoned the deal in May as the companies struggled to overcome antitrust concerns from the U.S., the EU and other regulators.

"Once the missing information is supplied by the parties, the clock is re-started and the deadline for the commission’s decision is then adjusted accordingly," the commission said.

As MRC reported before, Dow Chemical Co. and DuPont Co., two historic giants of U.S. industry, will join in an all-stock merger of equals that’s the first step in a plan to create three new highly-focused businesses. The deal, the largest ever in the chemicals industry, will create a USD130 billion company that combines products from both Dow and DuPont in the areas of agriculture, commodities chemicals and specialty chemicals to create the new businesses.

DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber. In 2014, Dow had annual sales of more than USD58 billion and employed approximately 53,000 people worldwide.
MRC

MOSCOW (MRC) -- Lotte Chemical Titan is plans to shut its Low density polyethylene (LDPE) unit for a maintenance turnaround, as per Apic-online.

A Polymerupdate source in Malaysia informed that the company will be taking its unit off-stream in December 2016. The unit is likely to shut in early-December and expected to remian off-line until end-December 2016.

Located at Pasir Gudang, Malaysia, the LDPE unit has a production capacity of 230,000 mt/year.

As MRC informed previously, Lotte Chemical Titan is studying the possibility of building a USD4 billion upstream plant to reduce imports of raw materials. Around 40% of the total investment needed for the new plant would be taken from the company’s internal cash, while the rest would be from bank loans. Lotte Chemical, which currently has a production capacity of 450,000 tons of polyethylene per year, expects the upstream plant to boost production capacity to 1 million tons by creating ethylene.

Lotte Chemical Titan produces Malaysia's most comprehensive portfolio of olefins and polyolefins which contribute to the enhancement of everyday life. Lotte Chemical Titan's production site in Malaysia consists of eleven process facilities, two co-generation plants and three tank farms. They are located on 2 sites in Pasir Gudang and Tanjung Langsat in the state of Johor. In 2006, Lotte Chemical Titan acquired PT Lotte Chemical Titan Nusantara, Indonesia’s first and largest polyethylene plant in the country. This acquisition boosted the polyolefins capacity by approximately 50%, thus making the company one of the largest producers in South East Asia. Lotte Chemical Titan was acquired by Lotte Chemical Corp., forming part of the Lotte conglomerate of Korea, in 2010. The company thus became one of Lotte Chemical Corp.’s largest overseas subsidiaries.
MRC

MOSCOW (MRC) -- Showa Denko (SDK) will terminate the production of Bionolle biodegradable polyester resin by the end of December 2016 and will discontinue sale of the product by the end of December 2017, as per Apic-online.

SDK noted that it is "difficult for the company to continue production and sale of biodegradable plastic, since there has been no sign of improvement in the harsh market environment for biodegradable plastics business because of the delay in permeation of environmental regulations on plastic shopping bags and a fall in market prices of biodegradable plastics."

The company, as part of its medium-term business plan, will continue to focus on accelerating the expansion of its functional chemicals business.

As MRC reported previously, in August 2016, Showa Denko K.K., JX Nippon Oil & Energy Corp. (JX), and LyondellBasell Group reached final agreement concerning the sale and purchase of LyondellBasell’s shares in SunAllomer Ltd. (SunAllomer), a joint venture (JV) company among the three parties for the development, production and sale of polypropylene (PP) and PP-based advanced material.

Showa Denko K.K. is mainly engaged in the petrochemical business. The Petrochemical segment manufactures and sells olefin, organic chemicals and others. The Chemical Product segment supplies chemicals, industrial gases, special gas and functional drug for semiconductors, functional high molecular materials, among others.
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MOSCOW (MRC) -- France's Total and Italy's Erg are looking to sell a stake in their Italian refinery business Sarpom to facilitate an auction of one of the country's biggest service station networks, sources said, reported Reuters.

The two companies jointly control TotalErg which operates close to 2,600 service stations in Italy with a market share of around 11% and also owns a quarter of Sarpom.

The sale of TotalErg, led by HSBC and Rothschild, is expected to begin by the end of the year, the sources said, noting that stripping out non-core assets such as refineries and lubricants would make the deal more attractive for prospective bidders.

Erg declined to comment while a spokesman for Total referred to previous comments by CEO Patrick Pouyanne who said in September the group continued to divest positions in Marketing & Services across Europe where its market share is too low.

TotalErg, 51% owned by Italian green company Erg, is valued at up to USD888 MM and has drawn interest from private equity and industry players, with some hoping to buy a retail business free of refineries, lubricants and other non-core assets.

TotalErg has a 25% stake in the northern Italian refinery Sarpom which is controlled by ExxonMobil's Esso unit with a 75% stake. There was no indication of how much the partners would want for their stake.

Sarpom is proving to be a stumbling block in clinching a deal for the pump network since prospective bidders would not have control, sources said.

Should a carve out of Sarpom fail, the asset would be wrapped back into the main deal, one of the sources said.

Italy's service station landscape is over-crowded, with around 21,000 points across the country, twice the number in France and almost three times that in Britain.

A change of ownership for TotalErg may lead to restructuring of the business with some possible closures and job cuts.

It comes at a time when the government of Prime Minister Matteo Renzi is at risk of losing support ahead of a referendum on constitutional reform that could cost him his position.

Italian privately-owned refiner API has shown interest in the deal and may team up with a private equity outfit to make a competitive offer, sources said.

If successful, a deal with API would create Italy's biggest petrol station player, leapfrogging Eni and Kuwait Petroleum International which last year bought a network of 830 Italian pump stations from Royal Dutch Shell.

US buyout fund Carlyle is also expected to enter the race for the Rome-based business attracted by its turnaround potential and has held talks with API to evaluate a joint offer, the sources said.

Any restructuring is expected to get the nod from Rome which is trying to push through legislation to cut the number of stations to bring them into line with demand, two sources said.

We remind that, as MRC informed previously, in December 2014, Total, Europe’s third-largest oil company, permanently shut its high density polyethylene (HDPE) line owing to weak margins which had arisen on account of cheap imports in the region. Located at Antwerp in Belgium, the line had a production capacity of 70,000 mt/year.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- Taiwan's Formosa Petrochemical Corp. has planned maintenance at its 540 Mbpd Mailiao refinery next March, September and November, a company spokesman said, reported Reuters.

Formosa is one of the largest oil products exporters in Asia, so any major supply cuts from the refiner would likely support margins.

The refiner is planning to shut a 180 Mbpd crude distillation unit (CDU) and two residue desulfurizer units (RDS) with a capacity of 80 Mbpd each at some stage during the maintenance periods, said spokesman KY Lin.

It is also planning to close a delayed coker unit and a vacuum distillation unit during the maintenance, he added.

The exact duration and timeline of each closure will be firmed up later this month, he said.

There will be more units in maintenance in 2017 than in typical years, he added.

"Next year, we will have more shutdowns than this year. Normally we have to shut down one CDU and two RDS and sometimes one residual fluid catalytic cracker, but next year we will shut down the delayed coker and vacuum unit also," he said.

Meanwhile, the company has offered diesel and jet fuel for 2017 term contracts, tender documents showed on Friday.

As MRC informed before, in the second half of September 2016, Formosa Chemicals & Fibre Corp (FCFC, part of Formosa Petrochemical) restarted its polypropylene (PP) units following a maintenance turnaround. The units were taken off-line in mid-August 2016 for planned maintenance. Located in Ningbo, China, the plant comprising two units have a production capacity of 280,000 mt/year and 170,000 mt/year.

Besides, Formosa Plastics Corporation, U.S.A., also part of Formosa Petrochemical, will build a new, state-of- the-art PP production line at its Point Comfort, Texas site. This will be the first new PP production to be built in the US in many years. It continues the company’s longstanding commitments to its customers, its employees and the communities in which it operates.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company's plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
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