Major new purchase for Indorama

Indorama Ventures (IVL) is now to acquire Performance Fibers Asia from Sun Capital Partners, including all its Asian manufacturing operations and the right to continue using the name.

Performance Fibers Asia is the leading producer of tyre fabrics in the region and   the second largest production facility of its kind in China. Asia is the largest and fastest-growing market for tyres globally, accounting for more than 50% of global tyre demand in 2013 and expanding at 8% CAGR over the last five years.

This acquisition continues   IVL’s strategy of strengthening its presence in the automotive market and follows the acquisition of PHP Fibers and Trevira in the last two years. These combined three businesses are expected to have annual revenue of at least $850 million.

The Performance Fibers business in Europe and the Americas will continue to operate separately under the ownership of Sun Capital and the leadership of the existing management team in those regions.

Performance Fibers Asia production facilities are strategically situated in the Pearl River Delta city of Kaiping, where IVL’s Guangdong facility is a supplier of speciality PET polymers, providing immediate synergies in the raw material supply chain and operational excellence.

“This acquisition is a great strategic fit for IVL,” said CEO Aloke Lohia. “We are acquiring a company that has an established premier position in the life-critical end-use applications in the tyre industry across the world. The company has a proven management team with a track record of value creation, expanding the business at 17% CAGR over the last four years. Our specialty polymers, fire retardant yarns, and airbag yarns businesses together with Performance Fiber Asia’s tire fabrics will create scale as well as operational and technical leverage. With the continued growth of China, India and all emerging nations, the industry growth outlook for tires remains very attractive especially as radial tires’ importance is increasing for fuel efficiency and passenger comfort.”

The transaction closing is expected in the next three months subject to customary regulatory approvals.