Royal Dutch/Shell and Montedison SpA have tentatively agreed to create a $3.5 billion joint venture company to produce and market polyolefins.
The two signed a memorandum of understanding earlier this month to create a 50-50 venture following a year of negotiations.
The new company will be established in the next 6 months, incorporating most of Shell's polylefins operations and the operations of Montedison units Himont and Moplefan. Shell would commit ethylene and polypropylene operations to the venture.
Himont is a major polypropylene producer, Moplefan a major producer and marketer of polypropylene film and fibers.
The joint venture company will have capacities of 3 million metric tons/year of polypropylene and 500,000 tons/Year of polyethylene.
Further details about the scope of operations or what facilities may be involved are not disclosed.
Montedison and Shell notified the antitrust committee of the European Economic Commission about the proposed venture. An initial informal review of the proposed venture is under way by the committee.
EEC sources said the new company is not likely to dominate the highly competitive European plastics market.
Industry analysts see the venture as a good combination of Shell's strong financial and feedstock positions and Himont's technological edge.
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