CHEMICAL UPDATE
MARCH 2011
McIlvaine Company
TABLE OF CONTENTS
Eastman Chemical Tritan Copolyester Resin at Chicago Housewares Show
BASF to Explore New Investment in Brazil
Berkshire Hathaway to Acquire Lubrizol for About $9 Billion
BASF to Acquire Global Styrene Catalysts Business
Amyris Expands Brazil Ops with Paraiso Mill Accord
DuPont to Acquire Danisco for $6.3 Billion
Dupont Expanding Shanghai R&D Facility
Aviation De-Icing Acquisition to Expand Clariant’s North American Capabilities
Materia Plans Singapore-Based Catalyst Manufacturing Facility
US Invista Plans to Build New Nylon 6,6 Plant in China
Eastman Chemical Co. found itself in an enviable position when it introduced its Tritan copolyester resin in 2007 just as some consumers and manufacturers were turning against polycarbonate.
Tritan quickly became the accepted alternative for bisphenol A-free water bottles and food containers, mentioned by name in marketing campaigns and on product information tags. The material also is showing up in new products such as cold-drink glasses and lunch carriers.
But with more competitors positioning themselves to take advantage of the interest in clear resins in housewares — including acrylic and styrene acrylonitrile — Eastman is quickly adapting and moving toward marketing other advantages to Tritan to maintain its market share in housewares beyond being a polycarbonate alternative.
“You need something that’s really durable and glass-like, but something that also has sustainability and toughness,” said Emmett O’Brien, an applications development specialist with Kingsport, Tenn.-based Eastman.
Those qualities have won Tritan increased business in small appliances like blenders and food processors, O’Brien noted.
So during the International Home + Housewares Show held recently in Chicago, Eastman showed off Tritan glassware that had sailed through hundreds of dishwasher cycles, as well as damaged competitors.
It also introduced a series of videos showing Tritan plastics undergoing a series of literal hits. Eastman brought in sluggers from a local high school baseball team to take swings at glasses made of Tritan as well as competing materials. Other videos showed a car running over Tritan pitchers and those made of other materials.
Eastman is showing the videos on the Internet at a new website — tritantough.com.
“It helps our brand explain what the value is in a very clear way,” O’Brien said.
BASF is exploring opportunities for a new investment in Brazil. Projects under consideration include the production of acrylic acid, butyl acrylate and superabsorbent polymers (SAP). The company is conducting a feasibility study to evaluate the technical, commercial and economic viability of operating a world-scale complex in Brazil.
Decision on the plants to be built as well as on their capacities will be taken after the completion of the feasibility study, which is planned to be concluded in 2011. With this investment BASF is targeting at the growing South American market with special focus on Brazil.
“BASF is currently producing butylacrylate in Brazil, but at the moment there are no production plants for acrylic acid and superabsorbent polymers (SAP) in South America at all – all product is imported,” said Dr. Alfred Hackenberger, President of BASF for South America. “With these new investments we will be the first company to produce acrylic acid and SAP in South America, which will enable us to better serve our customers, further foster our position in these markets and open up additional opportunities for our businesses in South America,“ concludes Hackenberger.
To secure the competitiveness of the investment under consideration, BASF and Braskem S.A., a major chemical company in Brazil, have signed a Memorandum of Understanding (MoU). This MoU defines the long-term supply conditions for propylene, which is used as feedstock for the acrylic acid production, as well as the supply of utilities by Braskem to BASF.
Acrylic acid is an important precursor in the value chain of superabsorbents, the active component of baby diapers and other hygienic products. Acrylic esters, the most important derivatives of acrylic acid, are used to produce architectural coatings, adhesive raw materials and construction chemicals.
Berkshire Hathaway Inc. agreed to buy Lubrizol Corp., the world’s largest producer of lubricant additives, for about $9 billion. Berkshire will pay $135 a share in cash, 28 percent more than Lubrizol’s closing share price on March 11, the Omaha, Nebraska-based company said in a statement recently. The purchase includes an additional $700 million of net debt.
Lubrizol was one of about 40 companies with market capitalization between $4 billion and $40 billion that had capital expenses accounting for at least 5 percent of their net fixed assets; a return on equity exceeding 10 percent; profit growth in the past five years that ranked in the top 50 percent; and an average price-earnings ratio in that span that was less than the median in the Standard & Poor’s 500 Index, data compiled by Bloomberg show.
Berkshire and Lubrizol said they expect the purchase to be completed in the third quarter. Lubrizol will operate as a subsidiary of Berkshire and remain based in Wickliffe, Ohio. Lubrizol had revenue of $1.32 billion in the fourth quarter and adjusted earnings per share in the period of $2.45, the company said last month.
Citigroup Inc. and Evercore Partners were financial advisers to Lubrizol, while Jones Day was legal counsel. Munger, Tolles & Olson LLP was legal counsel for Berkshire Hathaway.
BASF to Acquire Global Styrene Catalysts Business
BASF announced that it has signed a purchase agreement to acquire the styrene catalysts business of CRI/Criterion, a wholly owned subsidiary of Shell based in Houston, Tex., reports IEWY News. Financial details of the transaction are not being disclosed.
CRI/Criterion is a leading global manufacturer of chemical catalysts used in the dehydrogenation of ethyl benzene to styrene, which is a vital ingredient in the manufacture of plastics, rubber and resins. The acquisition provides a strong complement to BASF’s existing styrene catalysts business.
Upon deal closing, BASF will work closely with CRI/Criterion’s business, manufacturing and R&D teams to ensure a seamless customer and technology transition. BASF’s updated styrene catalyst portfolio will then be established over time based on an evaluation and comparative benchmarking of the performance characteristics of both BASF and CRI/Criterion solutions.
Closing of the acquisition is expected to occur by year-end 2010, subject to the satisfaction of all requisite regulatory approvals.
Amyris Inc, which has developed advanced biofuels technologies, said recently it has signed an agreement with cane processor Paraiso Bioenergia that will boost its production capacity in Brazil, Reuters reports.
The California-based Amyris will build a fermentation and separation facility for the production of cane-based specialty chemicals, while Paraiso will supply juice from up to 1 million tonnes of cane per year. The plant is expected to come on line in 2012.
Demand for renewable fuels and chemicals has been rising as consumers, especially in developed countries, opt for products that are less harmful to the environment.
The partnership with Paraiso is for the production of a renewable farnesene, a building block for the production of cosmetics, polymer additives, lubes, consumer packaged goods and cane diesel.
Amyris in 2010 set up a joint venture with Brazilian sugar and ethanol group Sao Martinho for the construction of a facility in the state of Sao Paulo, which is expected to come on line also in 2012.
Paraiso will also be the cane juice provider for a facility Amyris has in the same state in a partnership with Biomin GMBH, which is expected to start operating in 2011.
Amyris has also signed agreements with Brazilian ethanol makers Cosan, Bunge and Tereos for the future production of cane-based specialty chemicals and diesel.
The company' backers include funds affiliated with Kleiner Perkins Caufield & Byers, Khosla Ventures and TPG Biotechnology Partners. The firm raised $84.8 million in its initial public offering in late 2010.
Among Paraiso's shareholders there are private equity fund Terra Viva and pension funds including state-controlled Petros, Fachesf and Funcef.
DuPont has agreed to acquire Danisco (Copenhagen), a maker of enzymes and specialty food ingredients, for $6.3 billion.
Danisco’s Genencor unit is the second-largest maker of industrial enzymes after Novozymes. The addition of enzymes boosts DuPont’s efforts to build a leading position in industrial biotechnology, including renewable fuels and materials. Genencor’s current efforts in renewables include development of bio-based isoprene with Goodyear Tire & Rubber Co. and a joint venture with DuPont in second-generation bioethanol. Danisco said last month is expects to post revenue of around DKK 15.3 billion ($2.65 billion) for the fiscal year ending March 30, 2011, with EBIT of DKK 2.2 billion-2.3 billion for an EBIT margin of around 14.5%.
DuPont agreed to pay DKK 665/share, a 24% premium to Danisco's recent closing price.
"Biotechnology and specialty food ingredients have the potential to change the landscape of industries, such as substituting renewable materials for fossil fuel processes and addressing food needs in developing economies, that will generate more sustainable solutions and create growth for the company,” says DuPont chair and CEO Ellen Kullman.
DuPont will fund the deal with $3 billion in cash and the remainder in debt. The deal will reduce 2011 earnings 30 cts-45 cts/share below the forecast range of $3.30-$3.60/share announced last month, DuPont says. The transaction is expected to close early in the second quarter and be cash and will add to earnings in 2012, DuPont says.
“Danisco has two well-positioned global businesses that strongly complement our current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that offers attractive long-term financial returns,” Kullman says. “This also would create opportunities across other parts of the DuPont portfolio, including traditional materials science offerings.”
Genencor accounts for a third of Danisco’s revenues. The remaining two-thirds is food ingredients, including gums, cultures and sweeteners. DuPont says the transaction is subject to customary closing conditions, including regulatory approvals and the tender of more than 90% of Danisco shares.
DuPont Co. is doubling the size of its research and development facility in China to focus on new materials for photovoltaic, bio-based and automotive applications, as part of what the company said is a strategy to accelerate growth in developing economies.
The Wilmington, Del.-based company plans to add about 200 science and technology jobs at its facility in Zhangjiang Hi-Tech Park in Shanghai over the next two years, doubling employment there. The company said in a Dec. 21 news release that demand for those technologies is “rapidly increasing” in the Asia Pacific region.
“Asia Pacific and other regions around the world are undergoing transformational change, driven primarily by global population growth and a rising middle class” said Senior Vice President and Chief Science and Technology Officer Douglas Muzyka. “This research expansion, along with similar lab expansions in Brazil and India, is another important step to meet specific customer needs in key growth markets.”
DuPont said it opened research centers in Paulinia, Brazil, and Hyderabad, India, in 2010, along with two new solar energy centers in Switzerland and the United States, and agriculture research facilities in the Ukraine, United States and the Philippines.
The company opened the Shanghai facility in 2005.
Clariant, a leading supplier of de-icers for aircraft and runways in Europe, is expanding its capabilities in the North American de-icer market by acquiring Octagon Process LLC, a privately-held company based in N.Y. As a result of the acquisition, Clariant will provide customers a broader supply-chain network and enhanced geographic scope. Terms of the transaction were not disclosed.
“Through this acquisition, we will be better able to serve the region’s air carriers, airports and service providers through an expanded geographic footprint. We expect that our customers will benefit greatly from enhanced product and service offerings, consistent and reliable supply, and the logistical and sourcing strengths of a truly global organization,” said John Clarke, Head of Clariant’s Industrial & Consumer Specialties business in North America.
The combination of the businesses is expected to expand sales opportunities for increasingly popular “greener” de-icing technologies. The combined businesses will be able to offer innovative, proprietary and environmentally responsive products and systems for recycling and fluid management. These types of services will help American airports comply with stricter federal guidelines for the collection of sprayed de-icing fluid being introduced by the U.S. Environmental Protection Agency.
Clariant is a global leader in the field of specialty chemicals.
Materia Plans Singapore-Based Catalyst Manufacturing Facility
In a press release, Materia announced its plans for opening a catalyst manufacturing and R&D facility in Singapore. The company expects to complete the site selection process in 3Q 2011 and begin construction by year-end.
Materia's new facility will reach initial operating capacity of 10 metric tons by the end of 2012. In addition to catalyst manufacturing, the plant will house research, development, and technical service resources. The Singapore site will be operated and controlled by Materia's newly formed subsidiary, Materia Singapore Pte. Ltd.
Materia was founded in 1998 to commercialize olefin metathesis catalyst technology. This market-enabling, Nobel Prize-winning, green chemical technology enables chemical compounds to be synthesized with greater efficiency, under less stringent reaction conditions, and with reduced byproducts and hazardous waste. Metathesis has been accepted as an emerging “green technology” platform and has been broadly adopted by the pharmaceutical, chemical, and polymer industries. "This expansion represents the first step in our strategy to better serve our customers' needs through regional catalyst supply," stated Dr. Michael A. Giardello, Materia's Chief Executive Officer. "Industrial demand for our Grubbs catalyst technology is growing globally, particularly in Asia."
US Invista Plans to Build New Nylon 6,6 Plant in China
US Invista plans to build a new nylon 6,6 intermediates and polymer plant at Shanghai Chemical Industry Park in China by 2014. According to the company, front-end engineering work for the new plant has started while an environmental impact assessment is expected to be completed by the end of 2011. The company expects to start construction of the new plant in 2012 and begin production in 2014.
The plant is expected to have a design capacity of 10,000 mt/year, according to media reports. Apart from nylon 6,6, the plant will also make hexamethylene diamine and adiponitrile. The company's primary use of the nylon 6,6 fiber will be to make airbags in China.
Since November 18, 2008, Invista has operated an airbag fiber manufacturing plant with a production capacity of 11,000 mt/year in Qingpu district, Shanghai. The company plans to double the capacity of the airbag plant by 2013.
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