Sunoco Inc., Philadelphia, unveiled plans Thursday to acquire Pittsburgh-based Aristech Chemical Corp. from Japan's Mitsubishi Corp. for $695 million in cash, including $115 million for working capital.
Contingency payments up to a net present value of $167 million also may be made if realized margins for polypropylene and phenol exceed certain agreed upon thresholds.
Included in the purchase are five Aristech chemical plants located at Neal, WV; Haverhill, Ohio; Neville Island, Penn.; Pasadena and LaPorte, Tex., and a research center in Pittsburgh. The plants have the capacity to produce 1.5 billion lb/year of polypropylene, more than 1.6 billion lb/year of phenol and related derivatives, including bisphenol-A, and 800 million lb/year of plasticizers.
Sunoco Chairman and CEO John G. Drosdick said Friday that the acquisition would serve as a platform for expansion in product lines with high demand growth and with less capital intensity than traditional refining.
"While margins in chemicals have recently been low due, in part, to rising hydrocarbon raw material prices, the acquisition is anticipated to be significantly accretive to earnings and cash flow as the chemical industry moves to mid-cycle performance over the course of the next few years," Drosdick said.
He added that the polypropylene and phenol businesses integrate well with Sunoco's existing chemical operations and are a significant step in further upgrading Sunoco's portfolio of businesses.
