PITTSBURGH – Bayer Corp., Pittsburgh, is acquiring the global polyols business of United States-based Lyondell Chemical Co., 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. “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.”
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.
The acquisition covers the U.S. polyol production sites in Institute and South Charleston, W.Va.; and Chan-nelview, Texas. In Europe the sites are in Rieme, Belgium; and Fos-sur-Mer, France. 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.
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.
Lyondell has its own production facilities and major holdings in the U.S. companies Equistar Chemicals LP, Lyondell Methanol Co. LP and Lyondell-Citgo Refining LP (all located in 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 United States, Europe and other countries. It is anticipated that the acquisition will be finalized in the first half of 2000.