Indorama buys fibre firm's Asia operations
Indorama Ventures is taking over the Asia manufacturing operations of Performance Fibers, a producer of industrial polyester fibres and fabrics, from an affiliate of private investment firm Sun Capital Partners.
“This acquisition is a great strategic fit for Indorama,” chief executive officer Aloke Lohia said yesterday. “We are acquiring a company that has an established premier position in the life-critical end-use applications in the tyre industry across the world.”
Performance Fibers’ Asia business is the second-largest producer of polyester tyre-cord fabrics in China.
Asia is the largest and fastest-growing market for polyester tyre-cord fabric, accounting for more than half of global demand last year. The market has been growing by an average of 8 per cent for each of the past four years.
The Asia business of Performance Fibers has 17 per cent of the China market and 9 per cent of the Asian market, and the business has a strong management team, which will be retained after the completion of the acquisition, Indorama said in its filing to the Stock Exchange of Thailand.
“The company has a proven management team with a track record of value creation, expanding the business at 17 per cent CAGR [compound annual growth rate] over the last four years,” Aloke said.
“Our speciality polymers, fire-retardant yarns and airbag yarns businesses together with Performance Fiber Asia’s tyre fabrics will create scale as well as operational and technical leverage to firmly place Indorama among the leading brands in automobile safety applications worldwide.
“With the continued growth of China, India and all emerging nations, the industry’s growth outlook for tyres remains very attractive, especially as radial tyres’ importance is increasing for fuel efficiency and passenger comfort,” he said.
The transaction is expected to be closed next quarter subject to regulatory approvals. Financial terms of the agreement were not disclosed.
