BASF / HOECHST / SHELL / MONTELL
Two more mega mergers reshuffle plastics markets / Linkups in PP and PE / New major league players / Speculation over Hoechst's plans for PE / Europeans united against imports?
The wave of concentration in the European plastics industry that has given rise to ever bigger entities crested anew on 10 October when BASF AG (HQ: D-67056 Ludwigshafen) and Hoechst AG (HQ: D-65926 Frankfurt) announced plans to pool their polypropylene activities, and BASF and Shell (London and Hamburg) simultaneously said they would merge polyethylene interests, tacking on the PE business of Montell Polyolefins (PO Box 625, NL-2130 AP Hoofddorp) outside the US. Startup of the new firms will follow the settlement of organisatorial details and approval by pertinent authorities. Neither joint venture had been named as Plasteurope.com went to press.
Candidates for the new "marriages of convenience" are all no strangers to each other. They are linked, for example, in the Association of Plastics Manufacturers in Europe (APME). But while BASF and Shell have been business partners for some time in the polyolefins jv Rheinische Olefinwerke (ROW, D-50387 Wesseling), and Shell last year "tied the knot" with Montedison in Montell, BASF and Hoechst have not had formal ties since the breakup of the IG Farben cartel after World War II.
Polypropylene: The 50:50 BASF-Hoechst jv would create Europe's No 2 player, just behind Montell, with capacities for 1.4m t of polymer and DEM 1.7bn in sales (Hoechst's DEM 900m and BASF's DEM 800m). BASF is to contribute 730,000 t/y of PP produced at Wilton, UK (the former ICI site), Rozenburg, The Netherlands, and Tarragona, Spain, along with a pilot plant at Ludwigshafen and its licensing and its catalyst businesses. Hoechst would bring in 670,000 t/y capacity at Knapsack, Germany, Lillebonne, France, and Tarragona, and its share of output at the Tarragona jv with Repsol. Marketing and R&D also are to be merged. Plans call for ROW, which is to be absorbed by the BASF-Shell-Montell company, to produce PP for Hoechst-BASF under a toll agreement. Around 80% of ROW's output is PE.
The German majors' combined position in catalysts – the key to future developments in plastics – and the more solid critical mass in compounding could "lend new impulses to PP in competition with other polymers," Hoechst and BASF said. Headquarters of the new alliance is to be between Frankfurt and Ludwigshafen. Overlaps in administrative staff could create a few redundancies, but there are to be no job losses in production, a BASF spokesman told PIE. Stressing that expansion, not consolidation is the target, he also ruled out plant closures.
Polyethylene: The BASF-Shell-Montell linkup would have the capability to produce 1.4m t of LDPE, LLDPE and HDPE as well as ethylene feedstock. It would create a new No 4 player in Europe, trailing Borealis, Polimeri and Dow. This lineup could shift if the new jv realises its hinted-at expansion plans, representing "considerable investment." Montell's "Spheripol" technology, its "Spherilene" pilot plant at Ferrara, Italy, and its US plants are not part of the deal.
BASF's PE production, including its 430,000 t/y share of ROW's output, its marketing and distribution network, its technology and licence businesses, are to go into the new firm, which is likely to have two headquarters, including one in Germany. Montell plans to throw in its 540,000 t/y LDPE production at Berre and Fos, France, and Carrington. UK, plus its 50 % stake in the LLDPE jv (CIPEN) plant at Notre Dame de Gravenchon and half the output of its 800,000 t/y Aubette cracker.
While it remains to be seen how long EU competition authorities will take to approve the mergers, there seems to be little doubt they will. Larger and more powerful producers could have an impact prices, but they are not likely to curtail competition. At present, there are still enough players to keep markets lively. Competition between resins makers in Europe and Asia or the Middle East could influence markets more, observers believe. The question on most minds now is, who will merge with whom next, and, in particular, how long will Hoechst stand alone in PE? The Frankfurt group has given no helpful hints as to its further plans. Speculation in the past has focused on a possible link with the BP group (1 Finsbury Circus, GB-London EC2M 7BA). In any case, chairman Jürgen Dormann is often good for surprises, and he has made no secret of the fact that commodity plastics do not fit into his scenario for Hoechst's future.
Candidates for the new "marriages of convenience" are all no strangers to each other. They are linked, for example, in the Association of Plastics Manufacturers in Europe (APME). But while BASF and Shell have been business partners for some time in the polyolefins jv Rheinische Olefinwerke (ROW, D-50387 Wesseling), and Shell last year "tied the knot" with Montedison in Montell, BASF and Hoechst have not had formal ties since the breakup of the IG Farben cartel after World War II.
Polypropylene: The 50:50 BASF-Hoechst jv would create Europe's No 2 player, just behind Montell, with capacities for 1.4m t of polymer and DEM 1.7bn in sales (Hoechst's DEM 900m and BASF's DEM 800m). BASF is to contribute 730,000 t/y of PP produced at Wilton, UK (the former ICI site), Rozenburg, The Netherlands, and Tarragona, Spain, along with a pilot plant at Ludwigshafen and its licensing and its catalyst businesses. Hoechst would bring in 670,000 t/y capacity at Knapsack, Germany, Lillebonne, France, and Tarragona, and its share of output at the Tarragona jv with Repsol. Marketing and R&D also are to be merged. Plans call for ROW, which is to be absorbed by the BASF-Shell-Montell company, to produce PP for Hoechst-BASF under a toll agreement. Around 80% of ROW's output is PE.
The German majors' combined position in catalysts – the key to future developments in plastics – and the more solid critical mass in compounding could "lend new impulses to PP in competition with other polymers," Hoechst and BASF said. Headquarters of the new alliance is to be between Frankfurt and Ludwigshafen. Overlaps in administrative staff could create a few redundancies, but there are to be no job losses in production, a BASF spokesman told PIE. Stressing that expansion, not consolidation is the target, he also ruled out plant closures.
Polyethylene: The BASF-Shell-Montell linkup would have the capability to produce 1.4m t of LDPE, LLDPE and HDPE as well as ethylene feedstock. It would create a new No 4 player in Europe, trailing Borealis, Polimeri and Dow. This lineup could shift if the new jv realises its hinted-at expansion plans, representing "considerable investment." Montell's "Spheripol" technology, its "Spherilene" pilot plant at Ferrara, Italy, and its US plants are not part of the deal.
BASF's PE production, including its 430,000 t/y share of ROW's output, its marketing and distribution network, its technology and licence businesses, are to go into the new firm, which is likely to have two headquarters, including one in Germany. Montell plans to throw in its 540,000 t/y LDPE production at Berre and Fos, France, and Carrington. UK, plus its 50 % stake in the LLDPE jv (CIPEN) plant at Notre Dame de Gravenchon and half the output of its 800,000 t/y Aubette cracker.
While it remains to be seen how long EU competition authorities will take to approve the mergers, there seems to be little doubt they will. Larger and more powerful producers could have an impact prices, but they are not likely to curtail competition. At present, there are still enough players to keep markets lively. Competition between resins makers in Europe and Asia or the Middle East could influence markets more, observers believe. The question on most minds now is, who will merge with whom next, and, in particular, how long will Hoechst stand alone in PE? The Frankfurt group has given no helpful hints as to its further plans. Speculation in the past has focused on a possible link with the BP group (1 Finsbury Circus, GB-London EC2M 7BA). In any case, chairman Jürgen Dormann is often good for surprises, and he has made no secret of the fact that commodity plastics do not fit into his scenario for Hoechst's future.
31.10.1996 Plasteurope.com [19756]
Published on 31.10.1996