Acquisition of Lyondell Global Polyols Business
Secures Market Position in Polyurethanes
Interest in Building Up Life Sciences Operations Remains Undiminished
LEVERKUSEN, Germany, Nov. 16 /PRNewswire/ -- Bayer is acquiring the global
polyols business of United States-based Lyondell Chemical Company (NYSE: LYO),
Houston, for $2.45 billion in a move to strengthen its core polymers business
in the long term. As an integral part of the transaction, Bayer will acquire
an equity interest in the production of propylene oxide (PO), a raw material
for the manufacture of polyols. Bayer and Lyondell will also form an alliance
for joint technology development and the expansion of PO production
capacities.
"This acquisition fits us like a glove," Bayer CEO Dr. Manfred Schneider
said today. "It reinforces our core business in polyurethanes and secures our
position in the global market. It also gives us access to innovative,
patent-protected technologies and products." However, Schneider also stressed
that, despite this acquisition, the Bayer Group is not giving up its search
for partners in the life sciences field. "If the right opportunity comes
along we will act there, too," he said.
The world market for polyurethanes is growing at an annual rate of four to
five percent. The best prospects in international competition are for
companies such as Bayer, which supply not only isocyanates for polyurethane
applications but also the polyol component. Such companies can meet various
specifications for the most diverse areas of application.
As a result of continued capacity expansion, Bayer already meets about
one-quarter of the world demand for isocyanates. Polyurethane customers are
increasingly looking to suppliers who can provide all raw material components
and the necessary technical service from a single source. By acquiring the
Lyondell polyol business, Bayer will in the future be able to supply customers
with the packages they require, says Dr. Hans-Joachim Kaiser, General Manager
of Bayer's Polyurethanes Business Group. "That is why we are aiming for
integrated production chains and a broader product offering. The polyol
components are also of decisive importance to us in our innovation-driven
onward development of polyurethane applications."
The acquisition covers the U.S. polyol production sites in Institute and
South Charleston, West Virginia, and Channelview, Texas. In Europe the sites
are in Rieme, Belgium, and Fos-sur-Mer, France, and there are also majority
holdings in joint ventures in Indonesia and Taiwan. The facilities have a
total annual production capacity of approximately 700,000 metric tons. The
number of employees is almost 1,000. The technology also acquired from
Lyondell will in the future be used in Bayer's existing plants and greatly
increase their efficiency. The expected savings through synergies will well
exceed the integration costs by the year 2002 so that the profitability of the
Polyurethanes Business Group will be further improved.
Worldwide demand for polyurethane is growing constantly. The wide variety
of types, from solid engineering materials to foams with the most diverse
characteristics, gives it a multitude of applications in the electrical and
electronics, refrigeration and insulation, construction, technical parts and
in the furniture, and sports and leisure industries.
Bayer is one of the world's leading suppliers to the polyurethane
industry. The group has production facilities at 19 locations in Europe,
North America, Latin America, Africa and Asia. Last year, Bayer's
Polyurethanes Business Group, with more than 4,800 employees, had sales of
approximately $2 billion. This amounted to 25 percent of the total sales of
the Polymers Business Sector.
Lyondell, headquartered in Houston, has its own production facilities and
major holdings in the U.S. companies Equistar Chemicals LP, Lyondell Methanol
Company LP and Lyondell-Citgo Refining LP (all Houston). The company has
operations in 15 countries. It has 10,000 employees and generated sales of
$10 billion.
The acquisition is subject to the approval of Bayer's and Lyondell's
supervisory boards and to the approval of merger authorities in the USA,
Europe and other countries. It is anticipated that the acquisition will be
finalized in the first half of 2000.
SOURCE Bayer Corporation
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http://www.bayerus.com
Company News On-Call:
http://www.prnewswire.com/comp/092575.html or fax,
800-758-5804, ext. 092575
CONTACT:
Mark A. Ryan of Bayer, 412-777-2500, or fax,
412-777-3899, or mark-a.ryan.b@bayer.com; or Jackie Wilson of
Lyondell, 713-652-4596, or fax, 713-652-4151, or
jackie.wilson@lyondell.com
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