Deal for 30% of Indonesia giant
Stake in biggest petrochemical company for Bt13.5 bn
SCG Chemicals is spending about Bt13.5 billion to acquire a 30-per-cent stake in PT Chandra Asri Petrochemical (CAP), Indonesia's largest petrochemical company.
Chaovalit Ekabut, vice president for finance and investment and chief financial officer of Siam Cement Group (SCG), the parent company of SCG Chemicals, yesterday said in a filing to the Stock Exchange of Thailand that SCG Chemicals had entered into an agreement with PT Barito Pacific Tbk and Apleton Investment, a wholly owned subsidiary of Singapore's Temasek Holdings, for the stake acquisition.
It will buy 23 per cent of the shares in CAP from Temasek, and 7 per cent from Barito.
The overall transaction value is about Bt13.5 billion, at a purchase price of 4,088 rupiah per share. Following the acquisition, Barito will remain the major shareholder in CAP with a 70-per-cent stake.
Kan Trakulhoon, president and CEO of SCG, had said before the deal was completed that to have a petrochemical operation in Indonesia would fit with the company's strategy to expand its business in Asean. Petrochemicals is the largest business unit of SCG.
Prajogo Pangestu, president commissioner of Barito, said the partnership with SCG Chemical would enhance CAP for the future development of downstream products.
CAP generated sales of $1.86 billion last year. It has facilities for the production of polyethylene, polypropylene, styrene monomer and other olefins products.
Its plants are located in Cilegon, a major coastal industrial city in West Java.
Asia Plus Securities said in its research that the acquisition of CAP formed part of SCG's aggressive business expansion over the next five years, for which the company has set an investment budget as high as Bt150 billion.
SCG expects to realise revenue from the new entity in the final quarter of the year after the acquisition process is completed this month, the securities house said.
Asia Plus forecasts that SCG will make a profit from CAP of at least Bt850 million per annum, providing a return on investment of 6.4 per cent.
The return is likely to increase continuously over the next three years thanks to the upturn in the petrochemical sector, it added.
