EVC/Hydro: the vinyl frontier
15 Jan 2000
Spurred on by falling margins, EVC and Norsk Hydro's petrochemicals division have decided to merge their PVC and VCM businesses to create Europe's largest vinyls producer. The merged company, with a PVC capacity of 1.82 million tpa and 1.9 million tpa of VCM, will start trading by the end of the year, if the necessary approvals are granted.
The main reasoning behind the merger is savings; the firms believe that they can recover Fls80 million (£25 million) in synergies per year for the next three years, by reducing fixed and variable production costs and streamlining logistics. It will also give the company a 28 per cent share of the European PVC market, and over a million tpa of PVC capacity more than its nearest competitor, Solvay.
The companies view the deal as 'a merger of equals', although Hydro will hold a minority 45 per cent of the shares. Hydro has much less PVC capacity than EVC, but it is involved in chlorine and ethylene production from salt and natural gas in the North Sea, providing vertical integration.
The merger will exclude Norsk Hydro's 51 per cent stake in the cracker at Rafnes, Norway, and and its fabrication interests.
