Mexico's Alpek bets on PET packaging through Octal acquisition

MEXICO CITY (Reuters) -Mexican petrochemical company Alpek said on Tuesday it has signed an agreement to acquire international PET laminate producer Octal Holding for $620 million in a bet on plastics used in everything from water bottles to packaging.

Alpek, which already produces some PET products in addition to polyester and industrial and specialty chemicals, said the acquisition would add more than 1 million tonnes to its capacity.

“This transaction is ideal for Alpek. Through a single acquisition we get access to the growing and profitable segment of PET laminate,” Alpek Chief Executive Officer Jose de Jesus Valdez said in a statement.

Octal, the largest PET sheet producer in the world, serves customers in the Americas, the Middle East and Europe from its logistics center in Oman. It owns a patented technology known as direct-to-sheet (DPET), which uses a less energy-intensive manufacturing process, resulting in lower production costs and a lower carbon footprint.

“Given our positive view on PET, (Alpek’s) EBITDA could improve in 2022,” Citi analyst Andres Cardona said in a research note, adding that the deal offered exposure to the PET sheet business, one of the fastest growing segments for the material.

The financing for the acquisition will be covered through cash available on Alpek’s balance sheet, funds from its existing businesses and bank loans, and was made possible in part by the strength of its 2021 results, Alpek said.

Reporting by Valentine Hilaire and Raul CortesEditing by Paul Simao