BASF and Alpek change business units as they change the Mexican JV agreement

BASF SE German giant and Alpek SAB de CV, the petrochemicals arm of Mexican conglomerate Alfa Group have entered into an agreement that changes the business units of their 50-50 Polioles SA de CV, joint venture in Mexico.

Polioles S.A. de C.V. is a petrochemical company that manufactures and markets a range of chemical products. It has five business units: chemical specialties, estyropor, polyurethane, industrial chemicals and PUR’s, as well as two plants located in Altamira and Lerma. It is a subsidiary of "Alfa Group" and "BASF AG".

As part of the deal, expected to be completed by early 2015, Alpek will acquire Polioles’ expandable polystyrene (EPS) business totally, including its EPS production facility in Altamira, eastern Mexico.

While, BASF will acquire Polioles’ polyurethane (PU) business activities, including, selected assets in its Lerma (Mexico) facility as well as all marketing and selling rights for PU systems, isocyanates and polyols.”

Alpek and BASF said Alpek will also purchase BASF’s EPS business operations in North and South America, including:

• BASF’s EPS sales and distribution channels in both regions.

• BASF’s EPS production facilities in Guaratinguetá, Brazil, and General Lagos, Argentina.

• BASF’s EPS foam parts business in Chile (Aislapol, SA).

Excluded from the transaction is BASF’s Neopor (gray EPS) business. BASF will continue to sell Neopor to its customers in the United States, Canada and South America. In Mexico, Alpek will sell Neopor for BASF, “based on a distribution agreement.”

The combined capacity of all EPS production facilities to be acquired by Alpek is about 230,000 tonnes per year. This figure includes Polioles’ 165,000 metric tonnes per year production plant in Altamira.

The two partners stated that about 440 employees work in the businesses affected by the agreements — 380 in the EPS unit and 60 in PU. The majority of these employees will keep their position. Terms were not disclosed.

Polioles will continue operations as an Alpek-BASF joint venture, with a product portfolio comprised of industrial and specialty chemicals.

Founded in 1965, Polioles supplies the construction, electronics, paintings, cosmetics, automotive and furniture industries. BASF acquired a 40% stake in it when it bought Wyandotte Chemicals Corp. in 1969. Alfa purchased 60% of Polioles in 1974 and sold 10% of the company to BASF in 1994.

According to José de Jesús Valdez, Alpek’s CEO, this transaction is an attractive opportunity for Alpek to build upon its EPS operations in Mexico, expand its EPS footprint across the Americas and consolidate its plastics & chemicals product portfolio.

Alpek is the largest petrochemical company in Mexico and the second largest in Latin America. The company operates two business segments which are polyester (purified terephthalic acid, PET and polyester fibres) and plastics & chemicals (polypropylene, EPS, caprolactam, polyurethanes and other specialty and industrial chemicals).

Raimar Jahn, the president of president of BASF’s performance materials division said that BASF will focus its EPS business on strategic markets in Europe and Asia as well as on Neopor, which is produced in Germany and Korea.