PPG extends tender offer period for Tikkurila, waits for Russia approval

MOSCOW (MRC) -- PPG has announced that it is extending the tender offer period for all issued and outstanding shares of Tikkurila Oyj to May 11, 2021, as per the company's press release.

The tender offer period, which commenced on Jan. 15, 2021, was most recently scheduled to expire on April 14, 2021.

As previously announced, the European Commission and the Ministry of Economic Affairs and Employment of Finland have approved the tender offer.

The European Commission’s merger control approval applies without conditions across the European Union, including Poland.

The Agency for Protection and Development of Competition of the Republic of Kazakhstan has also now approved PPG’s acquisition of Tikkurila.

The completion of the tender offer remains subject to the receipt of regulatory approval from the Federal Antimonopoly Service of Russia, which PPG anticipates receiving within this extended period, and to additional customary conditions to completion, including the valid tender of shares representing, together with shares otherwise held by PPG and its subsidiaries, more than 66.7% of the outstanding shares of Tikkurila.

PPG will provide additional updates on or shortly after the extended tender offer period expires on May 11, 2021, and expects to close the acquisition shortly thereafter.

As MRC informed earlier, in February 2020, PPG completed its acquisition of Industria Chimica Reggiana (ICR, Reggio Emilia, Italy), a maker of automotive refinish products. Financial terms of the deal, including purchase price, were not disclosed. The deal was announced on 8 January. ICR was founded in 1961 and employs about 180 people. ICR manufactures automotive refinish products, including putties, primers, basecoats and clear coats. It also makes a range of coatings, enamels and primers for light commercial vehicles and other light industrial coatings applications. ICR employs about 180 people and sells its products in more than 70 countries in Europe, Africa, the Middle East, the US and Latin America.

We remind that Russia's output of chemical products rose in February 2021 by 5.3% year on year. Thus, production of basic chemicals increased year on year by 7.5% in the first two months of 2021, according to Rosstat's data. Last month's production of polymers in primary form in Russia was 861,000 tonnes versus 196,000 tonnes in January. Overall output of polymers in primary form totalled 1,770,000 tonnes over the stated period, up by 8.4% year on year.

Tikkurila was established in 1862, and is headquartered in Vantaa, Finland. Tikkurila operates in eleven countries and its 2,700 dedicated professionals share the joy of building a vivid future through surfaces that make a difference. The company is a leading producer and distributor of decorative paint and coatings with more than 80% of its revenue coming from Finland, Sweden, Russia, Poland, and the Baltic states. Its premium brands include Tikkurila, ALCRO, and Beckers. In addition, Tikkurila’s industrial paint business participates in the wood and protective coatings end-use segments, among others. The company employs approximately 2,700 people globally and reported sales of approximately EUR 582 million in 2020.
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Brazilian Tigre Group bought pipe fittings producer Dura Plastic

MOSCOW (MRC) -- Tigre Group, a Brazilian pipe manufacturer, has acquired U.S.-based PVC piping component maker Dura Plastic Products Inc. through its Tigre-USA Inc. business unit, said Canplastics.

The financial terms of the deal have not been disclosed. Dura Plastic is family-owned and has two production units, one in California and the other in Tennessee, and six company-run distribution centres throughout the U.S. “Together, Dura and Tigre are among the largest in the sector in the country,” Tigre officials said in an April 9 news release.

"The acquisition of this company accelerates our goal of serving the market with a high-quality and an even more comprehensive portfolio,” said Vicente Smith Amunategui, executive director of international business at Tigre Group. “Dura Plastic has more than 50 years in the American market, with an impressive track record in building reliable and innovative solutions for the construction and irrigation sectors."

“This type of transaction has always been in the plan,” said Dura Plastic vice president Hardy Rost. “The timing was right, and without further family succession, it was an easy decision when [Tigre] contacted us. It was important for the Rost family to find a strategic alliance, and in our discussions, it became evident that the core principals and business values were the same."

As it was written earlier, Mexico-based PVC pipe and specialty chemicals maker Mexichem SAB de CV is acquiring plastic pipe maker Dura-Line Corporation from private equity firm CHS Capital for USD630 million.

According to MRC's ScanPlast report, Russia's overall PVC production reached 259,400 tonnes in the first three months of 2021, down by 3% year on year. All producers reduced their output over the stated period.
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COVID-19 - News digest as of 14.04.2021

1. USA plans to invest in the market of advanced green energy technologies

MOSCOW (MRC) -- U.S. President Joe Biden’s vast plan to modernize the nation’s infrastructure includes hundreds of billions of dollars to boost the market for electric vehicles, renewable power and advanced clean energy technologies, while stripping away subsidies for fossil fuels, said Hydrocarbonprocessing. That makes the USD2 trillion infrastructure blueprint one of the administration’s biggest steps to date in achieving its agenda to decarbonize the U.S. economy by 2050 and restore the nation’s leadership in addressing global warming. While much of the package is aimed at traditional infrastructure goals like rebuilding roads and bridges, about a third, or USD628 billion, is linked to climate, according to an estimate by investment firm Raymond James. The proposals, which must still be debated and approved by Congress before becoming reality, drew cheers from the renewable energy industry and some environmentalists, along with criticism oil and gas drillers. “President Biden’s infrastructure proposal is a significant step in meeting our collective clean energy goals,” Solar Energy Industries Association Chief Executive Abigail Ross Hopper said in a statement.

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Crude oil futures rise on stronger demand outlook, weaker dollar

MOSCOW (MRC) -- Crude oil futures increased in mid-morning trade in Asia April 14, despite a pause in the Johnson & Johnson vaccine rollout and mixed data from the American Petroleum Institute, as the market remained buoyed by OPEC raising its 2021 oil demand forecast and a weaker dollar, reported S&P Global.

At 10:36 am Singapore time (0236 GMT), the ICE Brent June contract was up 42 cents/b (0.66%) from the April 13 settle at USD64.09/b, while the May NYMEX light sweet crude contract was 42 cents/b (0.7%) higher at USD60.60/b.

In its closely watched monthly oil market report released April 13, OPEC raised its 2021 crude oil demand forecast by 190,000 b/d from the March estimate, citing economic stimulus programs and a further easing of COVID-19 lockdown measures. OPEC now expects crude consumption to average 96.46 million b/d in 2021, up 5.95 million b/d year on year.

OPEC's improved demand outlook comes ahead of a scheduled easing of production cuts by the OPEC+ coalition, which is due to add 350,000 b/d of crude output in May, another 350,000 b/d in June and 441,000 b/d in July. Saudi Arabia has also announced that it will unwind its additional 1 million b/d unilateral cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.

The market also received a boost from a weaker dollar, which makes US-denominated assets such as oil futures more attractive to buyers holding foreign currency. At 10:36 am, the June contract for ICE dollar futures was trading at 91.730, down 0.449% from its previous settle.

Oil markets largely shrugged off reports linking the Johnson & Johnson vaccine to blood clots similar to those experienced by a small number of Oxford-AstraZeneca vaccine recipients. The US Food and Drug Administration has recommended pausing the use of the vaccine and Johnson & Johnson has announced it will delay its rollout in Europe, according to media reports.

"WTI crude is also benefitting from a weaker dollar and mostly on continued optimism that AstraZeneca and J&J's setback will be temporary and that the world will still be able to get their hands on other COVID-19 vaccines," Edward Moya, senior market analyst at OANDA, said in an April 14 note.

As MRC informed earlier, COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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Covestro increases 2021 forecasts due to higher margin

MOSCOW (MRC) -- German plastics group Covestro AG (formerly Bayer MaterialScience) has raised the outlook for its profit, cash flow and return on capital this year on the back of an improvement in margins at its core operating business, reported Reuters.

Covestro released its revised forecast under stock exchange rules requiring listed companies to update the market when performance diverges from expectations.

Earnings before interest, taxation, depreciation and amortization (EBITDA) are now expected to be between EUR2.2 billion and EUR2.7 billion (USD2.6-USD3.2 billion) in fiscal 2021, up from an earlier forecast of EUR1.7-2.2 billion.

The improved outlook reflects higher product prices and margins, mainly in its main businesses - transparent polycarbonate (PC) plastics as well as chemicals for insulation foams and upholstery foams.

Free operating cash flow was forecast at EUR1.3-1.8 billion, up from an earlier view of EUR900 million to EUR1.4 billion, while return on capital employed is now seen at 12%-17% compared to 7%-12% previously.

The company reported preliminary first-quarter EBITDA at EUR740 million and forecast EBITDA in the second quarter at EUR730-870 million.

It will report full first-quarter results on April 28.

As MRC informed previously, earlier this month, DSM completed the sale of the resins & functional materials businesses to Covestro for EUR1.6 billion (USD1.9 billion), including EUR1.4 billion in cash.

We remind that Covestro closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding exports from Belarus) totalled 8,100 tonnes in January 2021, up by 20% year on year (6,800 tonnes a year earlier).

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2020 sales of EUR 10.7 billion, Covestro has 33 production sites worldwide and employs approximately 16,500 people (calculated as full-time equivalents).
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