Lotte Advanced Materials Co., the chemical unit of South Korean conglomerate Lotte Group, has decided to acquire two troubled plastic makers in Indonesia as part of its vision to turn the Southeast Asian country into its global chemical outpost.
The unlisted Korean company said on Thursday it signed a deal to buy out full stakes in PT Arbe Styrindo and PT ABS Industri Indonesia that more or less monopolize acrylonitrile butadiene styrene (ABS) business in the country.
The acquisition value has not been disclosed.
Lotte Group, which has a sizable presence in Indonesia, decided on the acquisition on the bet that the demand for ABS - a tough, durable engineering plastic commonly used in consumer goods, appliances and automobile - will increase in Southeast Asian countries in line with improvements in living standards.
The two makers have the capacity to produce 40,000 tons of ABS polymers and compound a year. Their production lines have been halted since October due to financial distress.
Lotte Advanced Materials said it plans to normalize and ramp up their production capacity to 73,000 tons over the next year.
It aims to restart their commercial production in 2019 and groom the companies into solid businesses that generate an operating profit of 15 billion won ($13.9 million) and sales of 200 billion won.
Lotte has so far invested a total of $1.2 billion in Indonesia across a wide array of industries, including chemical, retail and tourism. The group currently holds 12 companies and over 8,000 staff in the country.
The newly acquired ABS plants are located in Banten, the westernmost province on Java island, where another group subsidiary Lotte Chemical Titan is building a $4 billion petrochemical plant. As Lotte Advanced Materials also plans to build another 300,000-ton ABS plant in the country by 2022, Indonesia is expected to serve as Lotte’s overseas chemical business hub.
By Lee Han-na and Kim Hyo-jin
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