Page 45 - Plastics News March 2019

BUSINESS NEWS

Saudi Aramco in talks with Olympus Partners to buy DS
Reliance Industries for joint Smith's plastics unit in $585M

investment deal

audi Aramco, the world's largest oil exporter is in talks tamford, based private equity firm Olympus Partners
Swith Reliance Industries and other Indian companies Sagreed to acquire the plastics business of the U.K.'s
for investing in petrochemicals and refinery projects in DS Smith PLC for an enterprise value of $585 million,
the country. The Saudi national oil company, which along representing a multiple of 9.9x EBITDA based on the
with its partner UAE's Adnoc has taken a 50 per cent stake 12 months to Oct. 31, 2018.The deal is expected to
in a planned $44-billion mega refinery-cum-petrochemical close in the second half of 2019, subject to regulatory
approvals and other conditions, according to a release.
The division comprises the plastics operations of DS
Smith, including flexible plastics, rigid plastics and
foam products. The business' gross assets totaled £223
million as at Oct. 31, 2018. The business, contributing
6 percent of overall revenue, was hit by higher polymer
prices and a lag in price recovery. The Plastics division
comprises the plastics operations of DS Smith, including
flexible plastics, rigid plastics and foam products. Gross
assets of the business as at 31 October 2018 were £223
million and profit before tax for the 12 month period to
complex in Maharashtra by state-owned oil companies, 31 October 2018 was £28 million. This sale represents
has bullish outlook on India's energy demand; and is keen an important step in DS Smith’s continued progress as
on investing here. Saudi Aramco CEO Amin Al-Nasser said a leader in sustainable packaging and accelerates the
he remains positive on the firm's investment in India, and programme of deleveraging, alongside organic cashflow.
is working with partners. He was replying to a reporter's The cash proceeds are expected to be used to reduce
question, on the sidelines of Saudi India Forum, about the the financial gearing of DS Smith plc, in line with our
fate of the 60 million tonnes-a-year refinery project after medium-term target of net debt / EBITDA at or below
ruling BJP and Shiv Sena agreed to shift the project from 2.0x. The sale is expected to result in a substantial
Ratnagiri district. "I think if there is any delay, we can exceptional gain and be marginally EPS dilutive. Smiths
catch up. All we hear lately is that things are progressing Plastics (PTY) Ltd, a subsidiary of Metair Investments
well and we should be optimistic about it going forward," Limited, has produced plastic injection moulded parts
he said when asked if search for an alternate site may
delay the project beyond agreed deadline of 2025. He said
Saudi Aramco continues to stay invested in the project,
agreements for which were signed last year. Saudi Aramco,
he said, is also in discussions with other companies about
investing in India. "We are not limited to that investment
(Ratnagiri refinery), which is the mega refinery...we
are looking at other opportunities," he said. India is an
investment priority for Saudi Aramco, he said. "There is
a lot of growth potential. We are looking at additional since 1977. Nearly a million plastic components are
investments in India. We are in discussions with other produced each month. Plastic products range from
companies as well, including Reliance Industries." He delicately balanced air conditioning rotors to large,
said Saudi Arabia is "very happy with demand" in india. complex, thin-walled mouldings and aesthetic parts,
"It shows growth in India. 8,00,000 barrels are exported such as plastic large door panels, glove compartments,
by Saudi Aramco to India. centre consoles, engine cam covers and many more.

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45 March 2019 Plastics News