In the recent turn of events unfolding across the global polymer industry, the chemical multinational LyondellBasell Industries has agreed to acquire its rival plastic compounding specialist, A. Schulman. Reportedly, the latest deal is likely to broaden Netherlands based company’s business into numerous sectors including electronics, packaging, automotive, agriculture, and construction.
According to Reuters, the USD 2.25 billion deal is expected to double the size of chemical giant’s business arm that majorly supplies plastic compounding materials to the auto industry. As of now, more than 90% of the firm’s sales are accrued from its compounded polypropylene, which has a massive demand from the auto industry.
According to reliable reports, LyondellBasell is counted among the world’s largest manufacturers of polypropylene and polyethylene. With an overall annual sales figures of more than USD 34.5 billion, the company clocks in USD 2.1 billion in terms of revenue from its compounding business.
Considering the fact that numerous polyethylene facilities in the nation would materialize in the next few years, experts cite that the latest acquisition can be termed as strategic that would favor the U.S. polymer industry. Furthermore, it is being said that the move will work in favor of LyondellBasell toward maintaining a strong position in its efforts to expand its polyethylene business.
For the record, A. Schulman is one of the prominent players in the U.S. polymer industry having registered revenue earnings of more than USD 200 million, before taxes, on the sales of USD 2.5 billion over a period of one year.
Keeping in view LyondellBasell’s aggressive stance, polymer industry experts speculate the company’s move of acquiring A. Schulman to have diversified its own plastic compounding business by expanding its access to myriad end-use industries other than the automotive.
The company anticipates seizing more than USD 150 million in annual cost synergies over the next two years of timeframe.