The Hindu Business Line : Reliance to buy Malaysian polyester company Hualon

The company would not disclose the consideration for the acquisition, but a spokesperson said it would constitute the largest FDI in Malaysia since the East Asian crisis (1997).

Although Hualon was mired in debt and accumulated losses, which had driven it to sell its assets, the buy was not at a throwaway price, said the spokesperson.

A petrochemical journal said — quoting sources close to Ernst & Young, managers and receivers for the assets — the sale attracted “a few bids” and that the response was “reasonably good.”

Reliance said this second international acquisition in the polyester business would increase its capacity by 25 per cent, and take its share in the world polyester fibre and yarn market to 7 per cent. (Reliance acquired Germany-based Trevira in 2004).

The buy would also help RIL consolidate its position as the world’s largest polyester maker at 2.5 million tonnes per annum capacity.

Reliance estimates that this buy will increase its turnover in the current fiscal by 3 per cent.

More importantly, it gets a foothold in the Western markets, Hualon being one of the largest exporters in Malaysia having, in its customer base, the ‘Who’s who’ of retailers in the US, said a spokesperson for Reliance.

The Hualon manufacturing facilities, which are proposed to be acquired, are in Nilai and Melaka in Malaysia close to Port Klang.

Reliance’s large capacities in Jamnagar can help to increase the downstream product capacities at the Malaysian plants, boosting their export capabilities further, said the Reliance spokesperson.

A report from Macquarie Bank said it was a well-timed acquisition since the integrated polyester margins, which are at near all-time lows, could rebound from current levels. “It is more a strategic buy from the global point of view, in terms of laying the ground for retail access for Reliance’s huge capacities that are coming up,” said Mr Vinod Nair, Research Analyst at Khandwala Securities.

He noted that since Reliance had not mentioned the price of the acquisition, there was not any dramatic movement in its stock price, which closed at Rs 1987.20 on Monday, gaining by 1.32 per cent.