National Petrochemical PLC to acquire Bangkok Polyethylene

BANGKOK�Flush from a second-quarter 429% jump in profits, National Petrochemical PLC of Thailand signed a memorandum of understanding Thursday to acquire Bangkok Polyethylene PLC, Thailand's largest producer of high-density polyethylene (HDPE). NPC agreed to buy the company's shares for cash. The price will be determined by a formal due diligence to be undertaken shortly.

NPC president Viroj Mavichak said negotiations for a share purchase agreement, worth billions of baht, are expected to be finalized in October this year.

The purchase of the 10-year-old BPE forms a key strategic move for NPC to integrate its petrochemical businesses in order to capitalize on the cyclical upturn in the world's petrochemical market, expected to peak in the next few years, he noted.

NPC produces 401,000 tonnes/year of ethylene and 27,000-46,800 tonnes/year of propylene from its olefins plant in Rayong, about 220 km southeast of Bangkok.

The ethylene and propylene are produced from ethane and propane extracted from natural gas piped from the Gulf of Thailand.

Located nearby, BPE's plant is capable of producing 200,000 tonnes a year of HDPE. An additional output of 50,000 tonnes/year will be available when a debottlenecking scheme currently underway is completed.

BPE is owned 40.23% by Bangkok Bank, 35% by Mitsui Group of Japan, 13.53% by Transpac, 7.21% by Bangkok-based Hua Kee Group, and 4.03% by others.

NPC profits

NPC posted a 429% jump in net profit in the second quarter of this year, fueled primarily by steadily rising olefins prices and stronger sales.

The consolidated net profit of 857 million baht ($21.42 million US) is the highest quarter result in the company's 16-year history, breaking the previous high of 827 million baht recorded in the first quarter of this year. Net profit for the second quarter of last year was 162 million baht.

The firm's sales of olefins (ethylene and propylene) and utilities leaped 81% in the second quarter of this year to 3.4 billion baht as the firm benefited from the 56% growth in its average olefins selling price, in line with rising world olefin prices.

World olefins prices rose to the $550-$650/tonne range in the second quarter of this year from $500-$550/tonne in the first quarter, said NPC president Viroj.

Production of ethylene and propylene at NPC's Rayong complex in the first half of this year totaled 270,00 tonnes with full production capacity being utilized.

Earnings per share for the first half was 5.43 baht, the highest in NPC's 16 years of operation.

NPC is 49% owned by the Petroleum Authority of Thailand.

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