MOSCOW (MRC) -- Malaysia's Sime Darby Plantation (SDP) said that it has agreed with PTT Global Chemical (PTTGC) to divest their collective 100% equity interest in the Asia Pacific business of Emery Oleochemicals and Emery Specialty Chemicals to Edenor Technology in a deal worth ringgit (MD) 38m (USD9m).
EOM, ESC and its respective subsidiaries, collectively referred to as Emery Group, is a 50:50 JV between Sime Darby Plantation and PTTGC.
In a filing Sime Darby Plantation said it has, together with PTTGC, inked a sale and purchase agreement to divest their collective stake in Emery Group to Edenor Technology for a target equity value of RM38 million.
"The equity consideration of RM38 million is derived based on enterprise value of RM243 million less the target net debt of RM205 million. The final sale consideration will be subject to price adjustments based on the net working capital and net debt position of EOM and ESC at completion," it said.
Edenor Technology is a JV company jointly incorporated by Mega First Corp Bhd and 9M Technologies Sdn Bhd to undertake the proposed acquisition. Sime Darby Plantation noted that the divestment is conditional upon the restructuring of Emery Group into separate stand-alone groups in respect of its Asia-Pacific business, and the North America and Europe businesses.
"Post restructuring, Emery Group's Asia-Pacific business will remain under EOM and ESC, while its North America and Europe businesses, both held under Emery Oleochemicals UK Ltd, will be transferred out from EOM, to be held directly by Sime Darby Plantation and PTTGC on a 50:50 basis," it added.
The group said the divestment is not expected to have a material effect on its earnings, consolidated net assets and consolidated gearing for the financial year ending Dec 31, 2021. Sime Darby Plantation's share price closed six sen or 1.56% lower at RM3.79 on Thursday, valuing the group at RM26.21 billion.
As MRC wrote previously, PTTGC abruptly shut down three crackers at its petrochemical complex in Map Ta Phut on 14 April 2021 after a thunderstorm caused a power outage. No. 1 and 4 crackers and the recently launched No. 5 cracker on the site were off-line for around one week. The production capacities of No. 1 and 4 crackers are 461,000 and 515,000 mt/year of ethylene, whereas the new cracker can produce 500,000 mt/year of ethylene and 260,000 mt/year of propylene.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.MRC