Grace rejects takeover bid by largest shareholder

MOSCOW (MRC) -- WR Grace has rejected a USD4-billion takeover bid from private investment fund 40 North Management (New York), its largest shareholder. 40 North made a USD60/share cash offer on 9 November, a 35% premium to Grace’s closing share price on 6 November, said Chemweek.

Grace shares jumped 27% on the news, closing at USD55.99/share on 9 November. 40 North owns a 14.9% stake in Grace and has two seats on the board following an agreement reached last year.

Grace said its board "believes that 40 North’s $60/share proposal significantly undervalues the company and is not a basis for further discussion." The company said it is "carefully evaluating and thoroughly discussing its value creation opportunities. At the same time, Grace is focused on executing its long-term strategy and advancing its key investments to accelerate profitable growth, improve its competitive advantages and strengthen its portfolio."

40 North said that a decline in margins in key businesses and failure to communicate effectively regarding environmental liabilities has created a drag on stock performance since the spinoff of its construction materials business GCP Applied Technologies in 2016. "Grace has underperformed the S&P 500 by 138% since the spin-off of GCP and is currently trading at 8.1x EV/EBITDA, which is about 2.5 times below its historical multiple and 3.0 times below its proxy peers,” 40 North said. 40 North said the offer "is well in excess of what the company will be able to achieve on its current course" and that it would allow Grace to solicit competing proposals for a period following any agreement. The proposal "guarantees that the company can secure a healthy premium for its stockholders while holding open the opportunity to obtain an even higher valuation."

In rejecting the bid, Grace said it has "a portfolio of high-value, specialty businesses and while end markets have been significantly impacted by the pandemic, the fundamentals of its businesses remain strong and demand trends continue to improve. As the company has communicated, most recently on its third quarter 2020 earnings call, Grace has often pursued opportunities to maximize shareholder value." Grace said its board "remains open to all opportunities to maximize value for shareholders."

Goldman Sachs and Moelis & Company are serving as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Grace. 40 North has retained Citi as financial adviser.

As MRC informed earlier, W. R. Grace & Co. licenses UNIPOL PP process technology to Dongguan Grand Resource for two additional lines. This is part of the continued investment in UNIPOL PP Process Technology lines by DGR. The first license was signed in 2016. Building additional capacity at the same site will help DGR further optimize costs, shorten construction time, and broaden their product portfolio.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

A leader in polyolefin catalysts and licensing, Grace has the world’s broadest portfolio of polypropylene and polyethylene catalyst technologies used to produce thermoplastic resins for a variety of applications. A leading innovator and strategic partner to its customers, Grace supplies catalyst solutions for all polyolefin processes, as well as polypropylene process technology and process controls. Grace employs approximately 3,700 people in over 30 countries.
MRC

MOSCOW (MRC) -- Chinese private-sector firm Wanhua Chemical has recetnly started up a new coal-based methanol plant at Yantai in Shandong province, according to Petrotahlil.

The new plant has a nameplate capacity of 600,000 t/yr and can produce up to 670,000 t/yr of methanol.

Wanhua has mothballed its old, coal-based methanol plant with 200,000 t/yr capacity at the same site.

The new plant may not have much impact on the methanol market as Wanhua plans to maintain low operations at the plant in the initial stage, mainly for its captive consumption by its methylene diphenyl diisocyanate (MDI), methyl methacrylate and methyl tert-butyl ether units totalling 200,000 t/yr of methanol demand.

Weak margins are another concern for Wanhua to produce more methanol.

Wanhua is looking to sell vessel cargoes to east China in the longer term. The company owns China's single-largest capacity propane dehydrogenation (PDH) plant at Yantai in Shandong province. The PDH unit has 750,000 t/yr of propylene capacity and fully integrated derivatives units. Wanhua is also the world's largest MDI manufacturer.

The company is also set to start up its 1mn t/yr propane-feed cracker in early November.

As MRC wrote previously, China’s Wanhua Chemical posted a 49.56% decrease in net profits in the first half of the year, as sales and prices both took a hit from the coronavirus pandemic. Slump in oil prices also dampened demand and prices of its products.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

ccording to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

MOSCOW (MRC) -- Valero Energy Corp reported a 37.2% jump in quarterly profit, supported by strong margins and a rise in refining activity after a crippling hurricane season that hurt refiners on the US Gulf coast, according to Reuters.

Net income attributable to Valero rose to USD841 million, or USD1.91 per share, in the third quarter ended Sept. 30, from USD613 million, or USD1.33 cents per share, a year earlier.

Operating revenue for the world’s largest independent petroleum refiner rose to USD23.56 billion from USD19.65 billion a year earlier.

As MRC reported before, Valero Energy Corp restarted the large crude distillation unit (CDU) at its 335,000-bpd Port Arthur, Texas, refinery the first week of September, 2020. The 268,000-bpd CDU was shut with all other units at the refinery on Aug. 25 because of the threat from Hurricane Laura.

We remind that in June 2020, Valero Energy Corp’s Memphis, Tennessee, crude oil refinery was operating at two-thirds of its 180,000 barrel-per-day (bpd) capacity because of low demand in the COVID-19 pandemic. The Memphis refinery cut production by as much as 50% in early April and has been raising production gradually since then.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

ccording to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

MOSCOW (MRC) -- Sika says it has started production of shotcrete admixtures at its main plant at Gournay-en-Bray, northwest of Paris, said Chemweek.

Shotcrete admixtures in the form of a set accelerator are used primarily in tunnel construction, and the company notes that the market potential is considerable. Europe alone is currently planning infrastructure-investment programs worth 750 billion Swiss francs ($834 billion) in total, with tunnel construction included in these programs, it says. Tenders have been issued for tunnel-construction projects with a combined length of 900 kilometers, with these projects set to come onstream over the next few years, according to Sika.

"The infrastructure construction market is generally characterized by a high level of resilience in crises. Even in 2020 capital spending remains strong. With the commissioning of the new facilities at the Gournay-en-Bray plant, our aim is to tap into business potential in France and in north and western Europe, and facilitate challenging shotcrete work in mining and tunneling projects with our specialty products. At the same time, we are strengthening our supply chain and competitiveness thanks to a sizeable reduction in logistics costs," says Ivo Schaedler, regional manager/EMEA at Sika.

The company notes that state investment is expected to drive the recovery of France’s construction sector in 2021, following a 4% contraction this year due to COVID-19. The French government’s stimulus program of SFr105 billion will include investment in the country's rail infrastructure and in extensive building renovations, the company says. More than SFr37 billion in investment will be channeled into the Grand Paris Express metro project by 2030, it adds.

As MRC reported earlier, in August 2015, Swiss specialty chemicals company Sika opened its forth production site in Russia. A new mortar factory and a plant to produce concrete admixtures were opened in Volgograd, in southern Russia. Thus, at the existing site in Lobnya, 30 km north of Moscow, a new production facility, which manufactures polymers for concrete admixtures, came on stream.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
MRC

MOSCOW (MRC) -- Wacker is to begin construction on a new production line for silane-terminated polymers at its site in Nunchritz, Germany, this year, said the company.

Such hybrid polymers are used as binders for formulating high-quality adhesives and sealants, liquid waterproofing systems and environmentally friendly wood-flooring adhesives, among other applications. The investment budgeted for the construction project is in the mid double-digit million range. The production line will go onstream in 2022. Wacker intends to significantly expand its production capacities for hybrid polymers and to further strengthen its focus on specialty chemical products with this investment.

For over fifteen years, Wacker has manufactured silane-terminated polymers at its production site in Burghausen, Germany. Since then, the hybrid-polymer business has experienced robust growth, the company now ranking the second largest manufacturer of silane-terminated binders for adhesives and sealants. “Given the obvious rise in demand for such products, expanding our production capacity for hybrid polymers was a logical decision,” says Executive Board member Auguste Willems.

The location for the capacity expansion was selected on the basis of market access, availability of critical raw materials and, most importantly, production technology aspects. “We have the space for a fully integrated production line in Nunchritz, which we could even expand, should the need arise,” noted Willems.

Hybrid polymers rank among the most important growth fields for WACKER SILICONES at present. “Our innovative alpha-technology based silanes are used in the manufacturing process,” says Robert Gnann who heads the company’s silicones business division. “Hybrid polymers have a unique property profile. That’s why they are used for formulating particularly high-quality and high-performance adhesives and sealants. WACKER has established a unique selling point worldwide with its alpha-silane technology."

Silane-modified polymers enable the manufacture of environmentally friendly adhesives. “The sustainability aspect is steadily gaining traction with the formulation of adhesives and sealants as well. This is what attracts manufacturers and customers alike,” says Gnann. “The alpha-silane technology allows us to develop customized binders for an exceptionally wide variety of adhesives and applications. Demand for these kinds of adhesives will continue to increase in the coming years."

Wacker has produced silane-modified polymers since 2005. Appli-cations for hybrid polymers, which the company has marketed globally under the GENIOSIL brand, include adhesives and sealants as well as construction, assembly and wood-flooring adhesives. Product properties like hardness, elasticity and tensile strength can be varied in a targeted manner with hybrid binders and adapted to special requirements for adhesive or sealant applications. In addition, further hybrid polymers developed in a patented process open up numerous new application areas. These include water-repellent sealing membranes for flat roofs and balconies on the one hand, and extremely strong adhesives, grout mortars, crack-filling compounds, paints and wear-resistant coatings for concrete floors, on the other.

As MRC reported earlier, Wacker Chemie operates a 90 ktpa EVA compounding plant at the Ulsan site, consisting of two lines. The second line with a capacity of 40 thousand tons of products per year was launched in 2013.

According to MRC's DataScope, September EVA imports to Russia fell by 30,32% year on year to 2,38 tonnes from 3,420 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-September 2020 by 9,85% year on year to 26,340 tonnes (29,220 tonnes a year earlier).

Wacker Chemie manufactures and markets EVA dispersions under the VINNAPAS brand name. VINNAPAS polymer dispersions are used in a wide range of industries: for the production of complex thermal insulation systems, building and tile adhesives, plaster, building mixtures and mortars, cement sealing slurries and nonwovens.
MRC