Eliokem, a global specialty chemical company and polymer producer, majority-owned by AXA Private Equity, has signed a purchase agreement with Apar Industries (Mumbai, India, “Apar”) to acquire its Polymer Division, for an amount of INR 1.1 bn (US$ 27.5m) subject to regulatory approvals.
Apar’s Polymer Division is the sole Indian manufacturer of nitrile rubber and has a strong leadership position in India. Its products offer excellent mechanical properties (abrasion and tear resistance) as well as exceptional chemical, oil and fuel resistance. End-use applications for Apar’s nitrile rubber include automotive parts and industrial goods such as rice rollers, hoses or shoe soles. Over the last two years Apar Industries has invested significantly in the Polymer Division to expand capacity, improve efficiency and consolidate the entire polymer business at a single production site at Valia (Gujarat). For the fiscal year ending March 2007, Apar’s Polymer Division achieved revenues of INR 1,4 billion (around $ 34 million) and is expecting greater than 30% growth for the fiscal year ending March 2008, following the restructuring of operations and strong market growth.
The acquisition of Apar’s Polymer Division fits perfectly with Eliokem’s expansion strategy implemented since AXA Private Equity acquired a majority stake in the company in October 2006. It will reinforce Eliokem’s synthetic polymer business where it already holds worldwide leadership positions and will notably complement the company’s offerings in nitrile rubber and high styrene reinforcing resins to the rubber industry. The operation is considered as well-timed when major industrial and financial players expect India to become a global manufacturing hub within the next few years.
As experienced peers and major players in the polymer industry, Mr Jacques Collonge, Eliokem’s CEO, and Dr Narendra Desai, Apar’s Chairman, have hailed the move as synergistic for the employees, the businesses and the customers. It meets the common objectives of reinforcing primary businesses and diversifying to adjacent segments through external growth.
“Apar Industries will be able to grow faster in the Power & Energy sectors through their other two Divisions, Specialty Oils and Aluminium Conductors, which account for 90% of the revenue of the listed Company”, stated Dr Narendra Desai.”
The Apar Polymer Division acquired manufacturing site is located in Valia, a prominent petrochemical region in the Western state of Gujarat, about 400 km North of Mumbai. Significant operational and technology synergies among the R&D and polymer production facilities of the Valia site and those of Eliokem in France and the USA will enhance the value of products and services offered to customers in Asia, Europe, Middle East and North America. Eliokem also intends to use Apar’s Polymer Division as a platform for growth and geographical expansion by leveraging respective sales forces to push Eliokem products in India and Apar’s Polymer Division products into other global markets
“The integration of Apar’s Polymer Division within Eliokem should be facilitated by the long shared cooperation of both our companies in the polymer business based on the emulsion polymerization technology inherited from The Goodyear Tire & Rubber Company to make a variety of specialty resins, rubbers and latices through combinations of monomers as diverse as acrylics, acrylonitrile, butadiene, styrene and vinyl pyridine. The new low cost manufacturing platform in India will strengthen Eliokem growth plan both domestically with cagr 10-15% as well as in Asia, Europe and USA”, stated Mr Jacques Collonge.