Mergers and acquisitions in the petrochem industry

The past decade has brought the untimely winding up or mergers for 16 major world petrochemical corporations, reducing the industry from 26 corporations to 10. Mega Corporations such as UCC, DSM, Mobil, Amoco and Idemitsu Tanker who once dominated the market have disappeared, and currently exist as new entities due to mergers with other corporations. The trend of shifting petrochemical industry from North America and Europe to the Middle Eastern and Asian regions will continue since Asia is likely to become the biggest user of petrochemical and plastic products very soon. No wonder that the North American and European majors are constantly consolidating. The biggest and latest entrants in this scenario of mergers were BASF and Shell. The two shocked the industry by announcing a merger of their polyolefin businesses in order to sell Basell, which had a monopoly on the world market. Few ofe reorganizations that have either taken place or likely to emerge in 2005 are: " Basell Polyolefins, the largest producer of PP is put on the block. Its ownership could change in future. " Bayer has separated its polymer group in the form of Lanxess in order to concentrate on life science. " BP and Nova have formed a merger of their styrene polymer businesses across Europe. The new joint venture will include 7 plants with total capacity of about 1.2 million tons of Polystyrene. " BP will buy Solvay's share of their joint venture in HDPE involving about 2.5 million tons of HDPE. " Borealis is selling its Spain plant to Repsol in order to concentrate its activities in the Northern Europe. " An Italian PET manufacturing company Gruppo Mossi & Ghisolfi is planning to construct 450KT/annum PET plant in South America to take the advantage of excellent growth and lack of adequate supply. Samsung Total has emerged from the worst circumstances, in this scenario of mergers and acquisitions. Despite North Korea`s nuclear weapons ambitions, the Total Group - a prominent French corporation decided to enter this region. In 2003, the French Total Group decided on a significant investment of US$800 million in Samsung General Chemicals Co., thus setting up Samsung Total Petrochemicals in August 2003 in a 50-50 partnership. The location of the complex is at Daesan, South Chungcheong Province. Annual production level is 2.4 million tons of ethylene, propylene, benzene and basic fractions, 820,000 tons of synthetic plastics, 1.15 tons of SM/PC and 250,000 tons of LPG . Samsung exports 4.6 million tons of petrochemicals to 130 countries from the central naphtha cracking factory and 15 other factories. With a location strategic due to proximity to China, Samsung Total (located only 400 kms from China) exports are on the rise.