The proposed merger of the styrenic block copolymer (SBC) operations of Kraton Performance Polymers (Houston, Texas / USA; www.kraton.com) and LCY Chemical Corporation (Taipei / Taiwan; www.lcy.com.tw/en) will not proceed – see Plasteurope.com of 08.07.2014. Kraton’s board of directors has withdrawn its earlier recommendation that shareholders approve the merger. The agreement was originally announced on 28 January 2014.

Despite both sides holding numerous discussions to revise the terms and conditions of the agreement, LCY notified Kraton on 4 August that it would no longer negotiate or agree to any changes. Kraton was seeking revised terms after a decline in operating results for LCY’s SBC business in the first quarter of 2014.

Kraton said in a statement that, as a result of the board’s withdrawal of its recommendation, LCY has the contractual right to terminate the agreement. Under the terms of the deal, Kraton must pay LCY a USD 25m break-up fee unless a material adverse effect at LCY has occurred and is ongoing at the time the Kraton board withdraws its recommendation. Kraton believes that the impact upon LCY of a gas pipeline explosion in Kaohsiung / Taiwan, on 31 July 2014, constitutes such an effect. For details on the blast, see Plasteurope.com of 13.08.2014.