Braskem acquires Quattor and Sunoco Chemicals and becomes the number-one producer of thermoplastic resins in the Americas
Braskem’s acquisition of Quattor Petroquímica in Brazil and Sunoco Chemicals in the United States has brought the company to a new level of competitiveness and size. It has gone from third to first place among thermoplastic producers in the Americas. And in the global rankings for petrochemicals, it has moved up from twelfth to eighth place. “The acquisition of Quattor is part of Braskem’s strategic drive to form a broad alliance with Petrobras to make the Brazilian petrochemical industry one of the strongest in the world,” says Braskem Entrepreneurial Leader (CEO) Bernardo Gradin. “As for Sunoco, it represents our first opportunity to operate outside Brazil.”
After nearly seven months of negotiations, the acquisition of Quattor was finalized in January through an agreement that, among other things, will change Braskem’s corporate structure. Odebrecht and Petrobras will share the company’s strategic decisions, and Odebrecht will have a 50.1% share of its voting stock. The agreement also involves the creation of a holding company, BRK Investimentos Petroquímicos, which will own all of Braskem’s common stock. Carried out in stages, the merger with Quattor will be submitted to the Council for Economic Defense (CADE), Brazil’s antitrust agency, for approval.
Engineer Luiz de Mendonça has been assigned to head Quattor. He has been a Braskem member since 2002, the year the company was founded, and his last position with the company was Vice President responsible for the Polymers Unit. Mendonça now faces the challenge of leading the consolidation of Quattor’s business culture and practices with Braskem’s philosophical principles. The first step was holding a number of open meetings with teams at the industrial plants in Duque de Caxias, Rio de Janeiro, the ABC region of São Paulo, and Camaçari, Bahia, as well as the São Paulo office, to discuss the merger of Quattor and Braskem and the role that Quattor’s teams will play in Braskem’s growth, while introducing them to Braskem’s strategic vision and culture.
To analyze Quattor’s processes and become fully familiarized with its operations as quickly as possible, work fronts have been organized to identify synergies and best practices that can and should be shared. Braskem members will work at Quattor and vice versa. Some areas will also be consolidated to better harness the potential of both companies.
Quattor has units and investments undergoing expansion that are ready to go online, which will add 200,000 tonnes per year of ethylene to its production capacity, possibly as early as May of this year. Others will add 200,000 tonnes per year of polyethylene. Rio Polímeros (RioPol) is expected to go onstream at full capacity in 2010, when Petrobras’s Plangás begins operations.
According to Otávio Carvalho, a director of the MaxiQuim consulting firm, Braskem has chosen the right way to take on the competition and expand its market. It has decided to bolster the industry in Brazil and internationalize its operations by acquiring petrochemical companies, as well as carrying out projects from scratch by prospecting for raw materials and building factories. Braskem is already studying several such initiatives, known as greenfield projects, in Mexico, Peru, Venezuela and Bolivia.
The first steps have already been taken in Mexico. Braskem and Idesa, a Mexican petrochemical firm, are partners in a joint venture controlled by Braskem (65%). The aim of this partnership is to develop an integrated petrochemical project to produce ethylene the polyethylene in that country using natural gas feedstock. Capable of producing up to a million tonnes of polyethylene per year, these new plants will begin operations by 2015.
Otávio Carvalho observes that one of the main features of the petrochemical industry is its global, competitive market. Now that the nation’s economy is booming and consumption is high, doing business in Brazil has become attractive to producers from several countries. “China, India and Middle Eastern countries, for example, are moving in our direction,” he says, adding: “Although Braskem is the only producer in Brazil, it is not the only seller. Global distributors are active in this country, and international companies with plants in Argentina, Colombia and the US have established commercial bases here and are vying for the nearly 11,000 clients in this country’s plastics industry.”
A long-term partner in projects at the Triunfo Petrochemical Complex in Rio Grande do Sul and the Paulínia Unit in São Paulo State, Petrobras has chosen Braskem to increase its stake in the petrochemical industry, “due to its expertise, and management, technical and commercial capacity,” according to Paulo Roberto Costa, the state-owned oil giant’s Downstream Director. “These characteristics have given us the peace of mind to play a more active role and increase our stake in its corporate structure.”
Carlos Fadigas, Braskem’s Vice President for Finance and Investor Relations, observes: “The consolidation of the oil and petrochemical supply chains adds value and competitive advantages to every link in those chains: extraction, refining, the production of raw materials for the petrochemical industry and their conversion into resins.” Another important aspect of this partnership with Petrobras is the fact that the oil company shares a long-term view of the business with Odebrecht. “The petrochemical industry is a capital-intensive sector that requires a long-term outlook. One or two years of low tide won’t daunt partners who have been in this market for decades, are familiar with the ups and downs and know how to plan for growth,” says Fadigas.
The plastics industry’s reaction to the acquisition of Quattor was one of “hope and confidence,” according to Alfredo Schmitt, Chairman of the Brazilian Association for the Plastic Packaging Industry (ABIEF). “As business leaders, we understand the world trend in the petrochemical industry, which is verticalizing and consolidating to compete on the global playing field, and we hope the resulting gains in scale will be felt throughout the plastics supply chain.”
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