Kraton Performance Polymers (Houston, Texas / USA; www.kraton.com) in late January 2014 announced that it had reached a definite agreement with Taiwan’s LCY Chemical Corporation (Taipei; www.lcy.com.tw/en) to merge the companies’ styrenic block copolymers (SBC) businesses. Under the terms of the deal, LCY will sell its SBC business in exchange for shares on the new, combined company. In the end, 50% of ownership in the new entity will be owned by each party. The merged business will be headed by Kraton CEO Kevin Fogart, with administrative headquarters in Houston, Texas / USA. However, it will be registered as a public limited company in the UK. Once the transaction closes – pending regulatory approval, the companies are hoping for Q4 2014 – both Kraton and the entities owning LCY’s styrenic block copolymers business will become subsidiaries of the new company.

The combination of the SBC-two businesses is expected to yield USD 65m in synergies on a run-rate basis by 2017, Fogart said, which are to be achieved by fixed-cost rationalisation, the optimisation of variable-costs as well as reductions in overhead costs. To achieve these synergies, however, the Kraton CEO expects the new entity to incur costs of about USD 70m in the next three years.

"With one-third of pro forma revenues coming from China and greater Asia, the combined company will be geographically balanced across its three regions – the Americas, Europe and Asia – and well-positioned to serve customers around the world with an industry-leading platform of innovation-grade products," said Dan Smith, chairman of Kraton's board of directors. LCY chief executive Bowei Lee also welcomed the merge, saying, “The combination of LCY's innovative SBC manufacturing technology and geographic focus in higher growth markets with Kraton's leading R&D resources will make the new company a leading global player in SBCs.”

The new company’ board of directors will consist of 14 directors, half of which will come from Kraton, and the other half from LCY. Initially Dan Smith , current Kraton’s board chairman, will become the new company’s board chairman for two years.

Last year, Kraton reached definite agreements to establish a 50:50 hydrogenated styrenic block copolymer (HSBC) joint venture with Taiwan’s Formosa Petrochemical(FPCC, Mailiao; www.fpcc.com.tw/english). After initial start-up difficulties – see Plasteurope.com of 12.10.2012 – the two companies sealed the deal to build, own and operate a 30,000 t/y HSBC plant on the island state.