Thailand based chemicals, fibres and woollen yarns conglomerate Indorama Ventures Group Ltd (IVL) is to acquire the assets of M&G Polimeros Brazil, strengthening its position in the polyethylene perephthalate resin (PET) market.

Brazil’s M&G Polimeros, located in Ipojuca, is the largest PET facility in the country, with a capacity of 550,000 tonnes per annum. The plant is strategically located and benefits from virtual integration with a manufacturer of purified terephthalic acid (PTA), a key feedstock to PET.

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The acquisition is in line with Indorama’s strategy to further extend its market position, and expand its global footprint in key markets with high growth potential. It will allow the company to deliver products to key customers in Brazil and elsewhere in a “cost-effective and efficient manner,” it says.

It will also “significantly” advance IVL’s strategy in its Necessities business, where the company aims to deepen its global footprint and build scale in key markets.

“We are pleased to have reached this agreement, and taken significant action to strengthen our capability for profitable growth,” says Indorama Ventures CEO Aloke Lohia. “Indorama Ventures now has unrivalled scale and global reach, being present in five continents with a uniquely balanced and integrated business model.

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“This is an exciting move for us, reflecting our continued commitment to support our customers using our global scale and local presence. We look forward to capitalising on this new market and opportunities for cross-selling to immediately deliver greater value to existing and new customers, while delivering profitable growth and enhanced shareholder value.”

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South America is an important emerging market with domestic demand for PET growing at around 5%. Today’s per capita consumption of PET is comparatively low at 2.8 kg and has great potential for growth, according to Indorama. Brazil also has strong underlying fundamentals, supported by government policies to stimulate economic growth and strengthen the domestic market.

The company says it expects immediate incremental revenues and cost synergies, driven by a substantial volume increase and potential value add through backward integration.

In 2017, Indorama recorded EBITDA of US$1bn, representing growth of 30% year-on-year. Significant improvement in the PET and feedstocks business environment helped boost earnings by 68%.

The transaction is expected to be completed in second quarter, subject to regulatory approvals.