and KP Chemical merged into a new company
Honam Petrochemical and KP Chemical to merge
into Lotte Chemical Corporation
A major South Korean pertochemical and polymer producer, Honam Petrochemical,
and one of the largest South Korean PET and PTA producer, KP Chemical, has
decided to merge into a new company with a new name Lotte
Chemical Corporation, wrote Soo Young Huh, the President and CEO of Lotte
Chemical Corporation, in his letter to the company's business partners.
After undergoing a sizable growth, Honam Petrochemical Corp and Kp Chemical
Corporation took one step further through a merger between the two companies,
which was effective as of December 27, 2012.
The name of the new company will be LOTTE CHEMICAL Corporation. The newly formed
company believes that this move will strengthen its position both in domestic
and international markets and is in a line with Lotte Chemical's strategy to
become a leading global company.
Honam Petrochemical Corporation is a South Korean producer of petrochemicals and
polymers with its businesses comprising of polyethylene (PE), high density
polyethylene (HDPE), polypropylene (PP), mono ethylene glycol (MEG), ethylene,
propylene, benzene, compound polypropylene, and other petrochemical products,
providing plastics, synthetics and basic chemicals. It holds the largest shares
in HDPE, polyethylene and MEG in the Korean market. The company also supplies
its production to the Russian market. As per MRC DataScope, in January-November,
2012, the import volumes of polymers by Honam Petrochemical to Russia amounted
to about 36,000 tonnes, out of which PE makes 25,346 tonnes, PP - 5,326 tonnes,
PET - 5120 tonnes. It is worth noting that in 2011 the company did not deliver
its material to the Russian market.
KP Chemical Corporation is one of the largest South Korean polymer companies,
which annually produces 740,000 tonnes of paraxylene, 955,000 tonnes of PTA and
446,000tons of PET by using the vertically combined production system
established in the Ulsan Plant Complexes 1 and 2. More than 90% of the company's
products are exported throughout the world. The major markets pioneered through
the company's robust sales network are China, Russia and Europe. According to
MRC DataScope, the import volumes of KP Chemical to Russia declined almost twice
in January-November, 2012, and amounted to 31,400 tonness, while during the same
period of 2011, this index made about 61,000 tonness. Despite the sharp decline
in sales in Russia, KP Chemical continues to occupy the leading position among
foreign producers in the Russian PET market.
Lotte Chemical Investing $2.6B In Two Joint
Korea-based Lotte Chemical Corp. has announced two joint ventures worth $2.9
billion that will help produce fabrics for Japan’s Mitsubishi.
The first venture is for an ethane cracker plant. Its site hasn’t been finalized
but it is anticipated to be near Lake Charles, La.
Lotte will hold 90 percent of the plant and Axiall will
hold 10 percent. The companies anticipate that the plant will produce
a million tons of ethylene a year.
Georgia Gulf は2013年1月にPPG
Industriesのcommodity chemical divisionと合併し、Axiall Corp.となった。
Ethylene from the plant will then be used to
make 700,000 tons of ethylene glycol, an ingredient
used in polyester fibers for Mitsubishi. The
ethylene glycol will be processed in a plant adjacent to the cracker that
Lotte will hold a 70 percent stake in, with Mitsubishi holding the rest.
According to regulatory filings seen by
Reuters the project will also be run as a joint venture, this time
with Japan’s Mitsubishi Corporation.
The plans still need approval from the
companies’ boards of directors.
Lotte Chemical owns three crackers in Asia that produce more than 2.8 million
metric tons of ethylene annually.
“We are pleased to affirm our partnership with Axiall to develop a world-scale
ethane cracker fed by U.S. shale gas,” said Soo Young Huh, Lotte Chemical CEO.
“This investment will build on Lotte Chemical’s global ethylene construction and
operating capabilities and increase our manufacturing presence in the North
Lotte Chemical Corp. plans to set up a shale
gas-based ethane cracker plant in the U.S. It is a large overseas chemical plant
business with investment approaching 3 trillion won (US$2.72 billion).
Lotte Chemical and Axiall Corp. of the U.S. have finalized their joint venture
arrangements to construct the ethane cracker plant in Louisiana on June 17
(local time). The project will produce ethylene, a basic petrochemical raw
material derived from existing crude oil using shale gas-based ethane gas
instead of naphtha.
Previously, the two companies had signed a basic contract for a joint venture in
Feb. last year. With the final contract this time, they changed the amount of
ownership and project details. At the time of the basic contract, Lotte Chemical
and Axiall held a 50-50 ownership agreement. However, it was decided that Lotte
Chemical will invest 90 percent while Axiall invests 10 percent in the plant.
With the change of ownership percentages, Lotte Chemical and Axiall will take
900,000 tons and 100,000 tons of ethylene, respectively,
from an annual production capacity of 1 million tons of ethylene. Lotte Chemical
agreed to sell 400,000 tons to Axiall, securing a
stable source of demand.
Lotte Chemical will use the remaining 500,000 tons of ethylene to make
ethylene glycol (EG) as planned earlier. The
company is currently considering cooperating with Mitsubishi of Japan in a bid
to stable its EG business, which was supposed to be run by itself. If so, Lotte
will hold a 70 percent stake in the business, with Mitsubishi holding the rest.
EG is often used in making synthetic fibers and automotive engine antifreeze
Combining the ethane cracker plant and EG business, the investment for the
project is estimated at 2.9 trillion won (US$2.63 billion). However, both
companies will decide the final investment in the second half of this year when
the plan for engineering, procurement, and construction (EPC) becomes clear.
They plan to begin commercial production at the end of 2018. Through the joint
project, Lotte Chemical expects to generate US$1.5 billion (1.65 trillion won)
in revenue every year from 2019.
Since the production cost of ethylene produced in an ethane cracker plant is a
third of that produced in a naphtha cracker plant, petrochemical companies
scramble to invest in the sector in order to reduce costs and diversify raw
Once the joint venture with Axiall starts commercial production, the annual
ethylene production capacity of Lotte Chemical will increase from the current
2.8 million tons to 3.7 million tons.
An official from Lotte Chemical said, “The project will reduce dependence on
naphtha and increase the use of low-priced gas together with the
Surgil chemical complex project in Uzbekistan,
which will be completed in the second half of this year. It will play a crucial
role in strengthening its global competitiveness through diversifying raw
materials, production bases and sales areas.”
Ustyurt GCC(gas-chemical complex）at
Surgil field will process 4.5 bcm of gas and annually from gas-condensate
Surgil, East Berdakh and North Berdakh fields and other fields respectively.
The processed products shall include 400 thousand tons of high-density
polyethylene (HDPE), 100 thousand tons of polypropylene, sales gas, py-gas
and py-oil. In addition, the Ustyurt GCC shall sell excess electricity
generated in excess of its needs.
June 21, 2012
KBR announced today that it will provide an integrated technology,
engineering, procurement and construction support solution for Uz-Kor Gas
Chemical’s flexible feed, 400,000 metric ton per year ethylene plant in the
Ustyurt region of Uzbekistan. The plant will be the first ethylene plant
based on KBR’s license in Uzbekistan and will utilize KBR’s proprietary
SCORE™ (Selective Cracking and Optimum Recovery) technology.
June 7, 2016 WSJ 6/10
Lotte Chemical Steps Into Battle for Axiall
South Korean group is offering more than $2.6 billion for U.S. company
A top South Korean conglomerate has lobbed an unsolicited bid of more than
$2.6 billion into an already messy U.S. proxy
battle, becoming the latest Asian company to make waves in its hunt for overseas
The offer from Lotte Chemical Corp. , disclosed in a regulatory filing Tuesday
morning in Seoul, injects Lotte into a battle for control of Atlanta-based
Axiall Corp. Earlier this year, the U.S. chemicals company rejected two
unsolicited bids from Houston-based Westlake Chemical
Corp. as “opportunistic and inadequate.”
Westlake has launched a proxy fight, and is
urging shareholders to approve its slate of candidates to
replace the board of Axiall at Axiall’s annual shareholders meeting on
Lotte Chemical has teamed up with Axiall in the past on investment projects in
the U.S., and it might be hoping its offer will get a friendlier greeting than
Westlake’s. Axiall and Westlake spokesmen couldn’t immediately be reached for
comment Tuesday after Lotte disclosed its bid.
Asian companies are taking up more bidding
wars for overseas targets, highlighting their rising confidence as they seek
growth abroad. This year’s 17 such unsolicited takeovers—either pending or
completed—is the highest number at this point since 2008, and the $54.9 billion
deal value is a record, according to Dealogic.
Lotte’s bid is among the largest, but the bulk of these uninvited Asian offers
come from ambitious Chinese companies such as Anbang Insurance Group Co., whose
failed $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. attracted
global attention in March.
Unsolicited bids are relatively uncommon in the world of big acquisitions; most
pursuers opt instead to negotiate in private with a company’s management before
placing a public offer. These Asian bids also stand out for their size: In many
instances this year, they have represented a big premium to their foreign
Lotte Chemical’s bid is a relatively modest one by that measure. And in general,
South Korean companies haven’t often shown as much appetite as Chinese companies
for entering U.S. takeover battles uninvited.
When they have, they haven’t always gotten results. The largest of these offers—
Samsung Electronics Co. ’s $5.85 billion bid for U.S.-based SanDisk Corp. in
2008—was withdrawn after several rebuffs.
The size of Lotte Chemical’s bid wasn’t disclosed in the regulatory filing, and
a spokeswoman for the Lotte Group said only that it was more than three trillion
won ($2.6 billion). Axiall’s market capitalization was $1.6 billion, based on
Monday’s closing price in New York. Its shares were up 9.4% at $25.49 on Tuesday
If successful, a deal would further consolidate the chemicals sector, following
the merger of DuPont Co. and Dow Chemical Co. , announced in December, and
ChemChina’s $43 billion acquisition of Swiss seed and pesticide company Syngenta
AG , expected to close this year.
Westlake’s initial bid came in January, after a bruising 2015 for Axiall, when
falling sales and profit sent its share price tumbling 64%. After being snubbed,
Westlake sweetened its offer to $3.1 billion, including the assumption of $1.5
billion in debt.
Lotte Chemical’s bid comes at a delicate time for South Korea’s fifth-largest
conglomerate, whose interests are as diverse as chemicals and chewing gum. Last
year it went through a boardroom coup in which Shin Dong-bin, second son of
Lotte’s nonagenarian founder, ousted the heir apparent, his older brother. Last
month, Mr. Shin filed for an initial public offering of the conglomerate’s
centerpiece, Hotel Lotte Co., that would be South Korea’s largest IPO to date if
the shares price at the top end of the indicated range.
But last week, South Korean authorities raided the offices of Hotel Lotte’s
lucrative duty-free shopping business, the source of most of its revenue and
profit. The authorities also raided the home of Shin Young-ja, a sister of Mr.
Shin and a top group executive.
South Korean media reports said prosecutors are looking into whether a local
cosmetics company paid bribes in exchange for floor space at Lotte’s duty-free
Hotel Lotte confirmed that the raids occurred, but declined to comment further
about the matter. Ms. Shin couldn’t be reached for comment. The Seoul Central
District Prosecutors’ office declined to confirm any details of the probe.
Hotel Lotte, which delayed the investor roadshow for its IPO because of the
investigation, said in a filing Tuesday that it would postpone its listing by
several weeks and lower the range at which it plans to sell its shares to
investors—though the high end of the new range would still put it in record
Lotte Chemical shares fell 3.5% on Tuesday in Seoul after its bid was disclosed,
to 260,500 won ($223.95), the lowest level since January.
November 23rd, 2017
Lotte Versalis Elastomers: a new industrial
complex in South Korea
A new integrated industrial complex for the production of elastomers was
launched today in Yeosu, South Korea. The launch was attended by the local
authorities, the Ambassador of Italy to Korea and major customers.
The new plants of Lotte Versalis Elastomers, a
50:50 joint venture between Versalis (Eni), a
global leader in the elastomers business, and Lotte Chemical, a major
petrochemical company headquartered in South Korea, have been built in a record
time of 26 months and in conformity with sustainability principles, thanks to
the use of the most advanced European technological standards. This important
achievement is part of Eni's strategy to transform its chemical business also
through international development.
The joint venture, established in 2013 with the aim of targeting growth in the
Asian elastomers market, uses Versalis' technology, industrial expertise and
commercial network, as well as Lotte Chemical's site integration, which ensures
the availability of feedstocks and industrial facilities.
The industrial complex has a nameplate capacity of 200
kton/year of elastomers (EPDM,
Ethylene-Propylene Diene Monomer; s-SBR,
solution-Styrene Butadiene; BR, Butadiene Rubber).
The production streams are targeted to premium application segments, mainly tyre
and automotive industries, styrenics modification and technical goods.
'The construction of the first industrial complex in Asia is an important
milestone in Versalis' international development strategy, which leverages
valuable proprietary technologies. It also strengthens our leading position in
the global elastomers market and other prospects for growth. We are excited to
be working on this project with an established partner such as Lotte Chemical.
By joining forces, both Versalis and Lotte Chemical are benefitting from
important synergies.' says Versalis' CEO, Daniele Ferrari.
Versalis is present in the Asia-Pacific region through its commercial units in
Shanghai, Qingdao, Mumbai and Singapore.
Great to welcome Chairman Shin from
Lotte Group to the WH. They just
invested $3.1 BILLION into
Louisiana-biggest investment in U.S.
EVER from a South Korean company, &
thousands more jobs for Americans.
Great partners like ROK know the
U.S. economy is running stronger