TWO COMPANIES' UNITS SET BIG PETROCHEM MERGER

Jan. 10, 1994
Royal Dutch/Shell and Montedison SpA plan a megamerger of most of their polyolefins assets this year. The move will create an equally owned company with revenues of about $3 billion/year and production capacities of 3.3 million metric tons/ year of polypropylene and 700,000 metric tons/year of polyethylene. The new company will control 18% of world polypropylene production capacity and own the rights to "the most revolutionary technology for polyethylene production," although controlling only a

Royal Dutch/Shell and Montedison SpA plan a megamerger of most of their polyolefins assets this year.

The move will create an equally owned company with revenues of about $3 billion/year and production capacities of 3.3 million metric tons/ year of polypropylene and 700,000 metric tons/year of polyethylene.

The new company will control 18% of world polypropylene production capacity and own the rights to "the most revolutionary technology for polyethylene production," although controlling only a small share of the polyethylene market.

A name and headquarters site for the enterprise will not be disclosed until the merger has been approved by authorities. Shell has said the head office will be in the Netherlands, however.

Major regional offices are expected to be in Brussels and Wilmington, Del., with main research facilities at Ferrara, Italy.

Shell said major benefits from the merger will include creation of the critical mass needed to sustain research and development of advanced polyolefins and enhanced prospects for growth in new applications and in replacing traditional engineering materials.

The enterprise will have manufacturing plants in:

  • North America 1.2 million metric tons/year in the U.S., Canada, and Mexico.

  • Europe 1.6 million metric tons/year in Belgium, France, Germany, Italy, Netherlands, and U.K.

  • Other countries 500,000 metric tons/year in Argentina, Australia, Brazil, Malaysia, Taiwan, and Thailand.

SHELL CONTRIBUTION

The new enterprise will include all of Shell's polyolefins assets apart from joint ventures in Germany, Singapore, Japan, and the U.S. Shell said its contribution will be a broad product range, feedstocks, and a global marketing network.

Shell currently holds 6% of the world polypropylene market with 1.2 million metric tons/year of production capacity, along with polyethylene production capacity of 500,000 metric tons/year.

Shell will retain 200,000 metric tons/year of polypropylene capacity. Eleven Shell polypropylene plants will be involved in the merger, with Shell's share of total capacity amounting to 1 million metric tons/year.

MONTEDISON CONTRIBUTION

Through subsidiaries Himont Inc. and Moplefan SpA, Montedison currently controls 12% of world polypropylene production capacity, or about 2.3 million metric tons/year. Revenues are about $2 billion/year.

All of Montedison's polypropylene business will all be merged into the new enterprise, along with a 200,000 metric ton/year polyethylene plant due on stream this year. The new plant is at Lake Charles, La.

A Montedison official said the merger will be perfect from the geographical, technical, and marketing viewpoints. Both partners would see more benefit from half ownership of the new enterprise than as separate companies.

One of Montedison's major assets is the Spherilene process, a new way of manufacturing polyethylene in spherical form. This stemmed from the company's Spheripol process for production of polypropylene in spherical form.

The official said Himont is the world's No. 1 producer of polypropylene in terms of volume and technology. Sixty percent of the world's production is credited to Himont and its licensed companies.

Montedison polypropylene plant capacities were not disclosed, but wholly owned plants are at Varennes, Canada; Hong Kong; Bayreuth, Germany; Beverate di Brivio, Brindisi, Ferrara, Laini, and Terni, Italy; Milton Keynes, U.K.; and Bayport, Cecil County, East Brunswick, Gahanna, Jackson, Lake Charles, Lansing and Wilmington in the U.S.

Montedison has polypropylene joint ventures in Belgium, Brazil, U.S., Mexico, Thailand, Taiwan, and Malaysia.

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