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Indorama Ventures Public Company Limited (IVL) accomplished its 100% acquisition of Brazil-based Oxiteno S.A. Indstria e Comércio today, establishing itself as a leading global supplier in high-value surfactant markets. The acquisition of Oxiteno, formerly a subsidiary of Ultrapar Participaçes S.A., was announced in August 2021 and will begin taking effect on 1 April 2022, following approval by Brazil's Administrative Council for Economic Defense (CADE).

With the acquisition, IVL broadens its growth profile into desirable markets in Latin America and the United States, attempting to establish itself as the leading surfactants producer in the Americas, with additional potential for expansion in Europe and Asia.

D K Agarwal, IVL’s CEO, stated that the company’s Vision 2030 of expanding its industry leadership in sustainability and maintaining our five-year goal of doubling our EBITDA. He added, that based on their experience of completing approximately 50 acquisitions over 20 years, the quality of Oxiteno's people and their shared values were critical factors to keep in mind.

Oxiteno brings an excellent management team, strong customer relationships in Brazil, Uruguay, and Mexico, sustainability innovation expertise, and a strong ESG/sustainability programme. Oxiteno joins IVL's Integrated Oxides and Derivatives (IOD) business segment, which IVL established in 2020 with the acquisition of assets from Huntsman Corporation in the United States (Spindletop transaction).

Along with IVL's traditional Combined PET (CPET) necessities segment and its Fibers segment, IOD is a high-margin growth driver. Together, the three segments of IVL form a more robust and resilient integrated platform along the company's petrochemicals value chain.

Oxiteno's acquisition includes 11 manufacturing plants in Latin America and the United States, five research and development centres, an experienced management team, a strong environmental governance record, and expertise in green chemistry innovation.

IOD assumes a leadership position in technologies that cater to innovation-led, high-value-add (HVA) surfactant solutions in appealing home & personal care, crop solutions, and coating & resources markets through Oxiteno.

This diversification improves the earnings stability and resilience of IOD. The surfactants market has grown steadily over the last decade, owing to trends in population growth, urbanisation, and increased hygiene awareness amid the global pandemic.

According to Alastair Port, Executive President, IOD, IVL, Oxiteno's surfactants business broadens its reach into higher-margin branded products closer to end-consumers in high-growth markets. These are positive signs for IOD, and he is delighted to welcome the new Oxiteno colleagues to the team. This is an opportunity for Oxiteno's talented employees to realise their full potential as part of a larger petrochemicals company with common values and a shared commitment to sustainability.

As per João Parolin, CEO of IOD, South America, IVL (formerly Oxiteno’s CEO) This deal is a prospect for Oxiteno to further progress, propel development, and promote the well-being of people through chemistry.

He said that the company is positive about its future specifically accounting for IVL’s vision to align 100% with theirs. He believes that collectively they will move on to drive innovation-led by sustainability to create perennial collections that leave an optimistic heritage for the community.
  
Parolin reaffirmed that Oxiteno's product offering is unchanged and enhanced by its affiliation with a complementary company with a solid global footprint, an integrated and innovative product portfolio, and deep expertise across the petrochemical value chain.

Joel Saltzman, CEO of IOD, North America, IVL, notified that the addition of Oxiteno's manufacturing sites in Mexico and the United States gives the company a significant advantage in the region for raw material sourcing. He said that their expanded presence in Mexico benefits their existing operations there, making them more competitive in the market. The opening of Oxiteno's Pasadena, Texas, facility accelerates IOD's surfactant expansion plans in the United States.

The Oxiteno transaction has a market capitalisation of 6.1x EV/EBITDA based on 2021 results and is immediately earnings accretive. Free cash flows entirely finance it, including a deferred payment of USD 150 million in April 2024, working capital, short-term assets, and interest-bearing debt. IVL expects to save USD 100 million through portfolio adjustments, asset optimization, and operational excellence.