Indorama Ventures Public Company Limited (SET: IVL) announced that the company’s Board of Directors approved an acquisition of 85% in UCY Polymers CZ s.r.o. (UCY) in Czech Republic.
The acquisition is a strategic fit for IVL as a backward integration into the company’s expanding rPET footprint in Europe and across the world to secure feedstock for rPET products. IVL is committed to increasing its recycling capacity to 750,000 tons per year by 2025, with a total US$1.5 billion investment to achieve its sustainability goals.
The total value of consideration for the acquisition of an equity stake of 85% in UCY is approx. EUR 6.8 million (equivalent to approx. THB 257,317,440), which will be further adjusted in accordance with the terms stipulated under the Agreement for the Sale and Purchase of participation in UCY. The amount shall be paid in cash.
Bualuang Securities (BLS) stated that it expects IVL to start revenue recognition starting from 1Q22 as the acquired business is already in operation. Due to the business size of UCY, which is considerably small compared to IVL, BLS expected it to have a positive impact to the bottomline by only a small portion.
Even though the acquisition will not have a significant impact to IVL’s profit, it reiterates BLS’ positive outlook on the company on its ability to seek potential growth continuously, which could be a support factor for its share price moving forward.
BLS gave a “Buy” recommendation on IVL with a target price at THB62 per share, maintaining it as a top pick in the petrochemical sector.
