ASIAN SPECIALTY CHEMICALS NEWSLETTER

June 2009, Issue 59

A Quarterly newsletter of developments in the chemicals industry

C o n t e n t s

We hope you find the Asian Specialty If you think that BDA’s services may be C hina ...... 1 Chemicals Newsletter informative. useful to you, please contact us at any one I n d ia ...... 4 of our offices or email me at erellie@bdallc. I n d o nesia ...... 4 BDA is an investment banking advisory com. Contact details for our offices are at firm which assists multinational clients to the back of this newsletter. We look forward J apan ...... 4 identify, assess and execute cross-border to speaking with you in the future. K o rea ...... 5 transactions involving Asia, including taiwan ...... 5 acquisitions, divestments, JVs, capital thailan d ...... 5 raising, and restructuring. We have offices Euan Rellie, Senior Managing Director V ietnam ...... 6 and professional staff throughout Asia, the [email protected] Middle East, the US, and Europe.

China Chemical Sector Stock Indices (12 months ending 23Jun09) Chem Index Chart 1 Blue Chemical Ltd, a Chinese nitrogenous fertilizer company, has acquired 83.2% of Hubei Dayukou 120 Chemical Co (“DYK”) and 100% of ZHJ Mining Co (“ZHJ”) from China National Offshore Oil Corp for US$184m. The 100 acquisition will allow China Blue Chemical to start phosphate ore mining and 80 China produce phosphate-based fertilizers, Japan and thus develop its phosphate fertilizer Korea EU and phosphoric chemical business. 60 US March 30, 2009

40 Bio-Bridge Science Inc, a biotechnology company that develops of vaccines and vaccine-related products announced 20 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 that its wholly-owned subsidiary, Bio- Bridge Science (HK) Co has entered into a JV with JR Scientific Inc, a US-based Source: Bloomberg, BDA * Note: No chemical index available for

Page 1 2 a s i a n S P e ci a l t y C h e m ic als newsletter j une 2009, Issue 59

reagents. The transaction will involve Specialty Chemicals P/R Ratios for Selected Countryies (23Jun09) the issuance of 6.6 million fully paid ordinary CBI shares to the shareholders of GL Biochem, representing 51% of 1.8x 1.7x CBI’s outstanding share capital. As

1.6x part of the transaction, GL Biochem will grant CBI an unencumbered option to 1.4x purchase all the issued capital of three related businesses, namely GL Biochem 1.2x (Danyang) Ltd, GL Peptide (Shanghai) Ltd

1.0x and GL Peptide (Binhai) Ltd (collectively, the “Associated Companies”) within 0.8x twelve months of the closing of the

0.6x transaction (the “Option”). The purchase 0.6x 0.5x price of the Option will range between 0.4x 0.4x 0.4x 0.3x 8.14 million shares and 18.64 million CBI shares, based on the forthcoming 0.2x 2008 audited after-tax profit results of GL Biochem and Associated Companies. 0.0x June 9, 2009 China India Japan Korea US EU

Source: Bloomberg, BDA Dragon Boom Investments Ltd, a subsidiary of China Zenith Chemical manufacturer of classical and custom Inc has agreed to acquire all of the Group Ltd, has agreed to acquire a stake cell culture medium and sera products outstanding shares of a privately in Racing Dragon Group Ltd from Time (“JRS”) and several other investors, to owned Shanghai-based chemical Boost Holdings Ltd. All the companies form a new cell culture medium JV in company and the largest supplier involved in the transaction are based in Beijing. The registered capital of the of research-grade peptide products British Virgin Islands. Racing Dragon is an JV will be US$15m. July 1, 2009 and peptide reagents globally. The investment holding company that owns acquired company has demonstrated industrial land, China Zenith Chemical Lanxess AG, a German specialty compound annual revenue growth produces coal-related chemical and bio- chemicals company, has acquired of over 40% over the past five years, chemical products. Dragon Boom will Polyols Chemical Co (“PCC”), and reported 2008 revenues of over acquire 55% of the issued share capital of a polyol producer serving China’s US$13m and net income after tax of Racing Dragon for US$10m. June 1, 2009 lubricants, paints, coatings and US$2m. July 4, 2009 printing as well feed additives markets. Hoe Seng, a Singapore-based rice Financial details of the transaction Commonwealth Biotechnologies, a products company, has acquired the were not disclosed. June 26, 2009 US-based provider of R&D products Guangdong-based ceramic opacifiers and services, has agreed to acquire GL and polyester resin catalysts activities Venturepharm Laboratories Ltd’s Biochem, a Shanghai-based chemical of Arkema Group SA, the listed French NASDAQ-listed flagship company, company and supplier of research- manufacturer of chemical products, Commonwealth Biotechnologies grade peptide products and peptide for an undisclosed consideration. The 3 a s i a n S P e ci a l t y C h e m ic als newsletter j une 2009, Issue 59 operations employed 115 people and Specialty Chemicals Trading Multiples for Selected Countries (23Jun2009) recorded 2008 revenues of $18m. Arkema was advised by BDA, and the divestment will enable it to focus on the development of core business segments. May 4, 2009 35.0x 31.5x Mitsubishi Rayon will acquire Lucite 30.0x International for US$1.6bn, creating an 25.0x entity with a 64% share of the Chinese 20.3x market for methyl methacrylate (“MMA”), 20.0x much bigger than the market shares of the second- and third-biggest suppliers, 15.0x 11.7x 11.9x Jilin Petrochemical and Heilongjiang 9.4x 9.7x 10.0x 8.1x 7.5x 7.2x Longxin Chemical Co. China’s Ministry 6.2x 5.8x of Commerce (“MOFCOM”) has given 5.0x 4.0x conditional approval, but has said this merger would diminish competition in 0.0x China’s MMA market. MOFCOM and China India Japan Korea US EU Mitsubishi Rayon have, as a result, EV/EBITDA P/E agreed that Lucite’s Chinese subsidiary Source: Bloomberg, BDA will give up the rights to 50% of its annual production to one or several third-party buyers. The arrangement will be effective shareholders including China Huayou, chemical company, has agreed to acquire for five years following completion of China Pipeline Bureau, and a synthesis gas catalyst manufacturing Mitsubishi Rayon’s acquisition of Lucite. China National Petroleum Corp for facility in Nanjing, China from BASF, May 28, 2009 $160m. The transaction is expected to a German chemical company, for be completed by December 31, 2009. an undisclosed consideration. The PetroChina, a Chinese oil and gas May 18, 2009 manufacturing facility has 400 employees producer, has acquired 45.5% of and produces more than 30 different Singapore Petroleum Co for US$1bn and , the Chinese petroleum refiner, types of syngas catalysts. The transaction plans to make an offer for the company’s has agreed to acquire Addax Petroleum, reflects Sud-Chemie’s expansion strategy remaining shares. The transaction, when a Canadian oil and gas exploration in the Chinese synthesis gas catalyst completed, will trigger a general offer company, for US$7.2bn. The deal market. April 20, 2009 for the remaining shares. PetroChina follows PetroChina’s agreement in and Keppel Corp have also agreed to May 2009 to buy Singapore Petroleum Praxair, a US-based manufacturer of cooperate in offshore oil platforms. May for US$2.3bn and CNOOC’s oilfield- industrial, process and speciality gases, 25, 2009 services arm’s acquisition of Norway’s has announced that its wholly-owned Awilco Offshore in July 2008 for subsidiary, Praxair (China) Investment PetroChina Kunlun Gas, a subsidiary US$2.5bn. June 24, 2009 Co has set up a JV in Guangzhou, with of Petro China, has agreed to acquire Sinopec, the Chinese petroleum refiner. the City Gas Business from multiple Sud-Chemie AG, a German speciality The JV, Praxair-GPC Industrial Gases Co, 4 a s i a n S P e ci a l t y C h e m ic als newsletter j une 2009, Issue 59 will produce, sell and distribute industrial has offered to acquire an additional which was founded in 2006, is located in gases such as oxygen, nitrogen, and 20% of Ciba India, an Indian chemical Liyang, west of Shanghai. June 10, 2009 argon for a wide range of industrial company, at USD$4.9 a piece. Earlier applications. The JV will also meet in April 2009, BASF SE had acquired a Ltd (“RIL”) has the demands of Sinopec for a quality, controlling stake in Ciba Holding AG, the bought back the entire 5% stake in reliable nitrogen supply. The venture is Switzerland-based parent of Ciba India, Reliance Petroleum Ltd (“RPL”) held by expected to start operations in Q4 2009. which triggered a 20% open offer for Ciba Chevron India Holdings for US$280m. Financial details of the transaction were India. BASF now holds 95.8% of Ciba The acquisition has increased RIL’s not disclosed. May 5, 2009 Holding AG. April 13, 2009 holding in RPL to 75.4%. May 1, 2009

Sinopec, the Chinese petroleum refiner, Cognis, a German supplier of ingredients Indonesia has secured supplies of crude oil via for personal and home care products, a $10bn loans-for-oil agreement with agriculture, coatings, lubricants, food UNIPOL(TM) Polypropylene Process Brazil’s . The deal will help ingredients, pharmaceuticals, and dietary Technology from Dow Basic Plastics, guarantee supply for Sinopec, which supplements, has opened an affiliate in a subsidiary of US-based Dow produces only 20% of the oil it needs. Mumbai, India. The Indian subsidiary Chemical Co, has been selected by PT The funds will help Brazil finance will be a wholly-owned subsidiary of Pertsmina (“PERSERO”), a state-owned development of the Tupi field, the largest Cognis and will operate under the name Indonesian oil and gas company, for crude discovery in the Americas in more of Cognis Specialty Chemicals Pvt Ltd. its new 250 KTA polypropylene facility than 30 years. Sinopec will get 150,000 Cognis first opened a liaison office in at its Balongan complex in West Java, barrels of oil a day from Petrobras, rising India in February 2008, with the aim Indonesia. A license agreement for to 200,000 barrels from 2010 to 2019. of bringing the company closer to its the facility was signed earlier this May 19 2009 customers in the region and gaining a month. When the project is completed greater understanding of local markets, in 2011, the facility will produce a mix Sinopec Yizheng Chemical Fibre Co following which it recorded a 30% of polypropylene products including (“SYCF”), a Chinese producer and seller increase in revenues. March 23, 2009 homopolymer, random copolymer and of polyester chips and polyester fibers, impact copolymers. Products will be has acquired the remaining 50% stake Lanxess AG’s India subsidiary Lanxess marketed primarily in the domestic in Yihua Unifi Fibre Industry Company India Pvt Ltd, a specialty chemicals firm, market. June 24, 2009 Ltd (“YUFIC”) from Unifi Asia Holding Srl will acquire the chemical businesses and (“UAH”), a Barbados-based manufacturer assets of Gwalior Chemical Industries, an Hidayat Nyakman, Chairman of of textured polyester yarns, for US$9m. Indian producer of sulphur chlorides for the Indonesian Both SYCF and YUFIC are based in the agrochemicals and pharmaceuticals Federation, announced that Mitsubishi China. YUFIC was initially set up as a industries, for US$114m. June 8, 2009 Corp, Japan’s largest trading company, 50:50 JV between SYCF and UAH in 2005 will invest US$1.5bn to set up a coal to manufacture, process, and market Lanxess AG will also acquire the business gas-based petrochemical plant in East polyester filament yarn. April 6, 2009 and production assets of Chinese- Kalimantan. June 16, 2009 based Jiangsu Polyols Chemical Co, a manufacturer of polyols. Financial details India of the transaction were not disclosed. Japan The transaction is expected to close in BASF­ SE, a German chemical group, Q3 2009. Jiangsu Polyols Chemical Co, Nippon Oil Corp, a Japanese petroleum 5 a s i a n S P e ci a l t y C h e m ic als newsletter j une 2009, Issue 59 product supplier, acquired 31% of Space Korea building materials such as extruded Energy Corp, a Japanese producer of polystyrene foam starting May 2010. solar cell silicon wafers, for US$30m. Techno Semichem, a listed Korean June 24, 2009 April 7, 2009 manufacturer of functional chemicals and advanced materials, has agreed to acquire Taiwan 23% of Phicom, a listed Seoul-based Sekisui Chemical, a Japanese building company engaged in semiconductor- materials and construction company, testing devices and reliability-measuring Danisco has formed a JV with Chinese has acquired the non-core polyvinyl systems. The transaction is valued microcrystalline cellulose (“MCC”) alcohol business of Celanese Corp, a US- at US$22m, a premium of 177% over manufacturer Mingtai Chemical, the based chemicals company, for US$173m. Phicom’s closing price one month prior second-largest MCC producer globally, Sekisui acquired one unit in Tarragona, to the announcement. March 9, 2009 to develop MCC products for the food Spain, and the facilities and resources industry. The deal adds MCC to Danisco’s in the US. The transaction also included Korea Kumho Petrochemical Co, Grindsted line of hydrocolloids. long term supply agreements between a Korean chemical producer, has Financial terms of the partnership were both companies. With the acquisition completed the construction of a not disclosed. The joint agreement of the polyvinyl alcohol resin business, US$40m plant in Shandong Province, allows Danisco to market MCC and both Sekisui secures a stable supply of raw China. The plant will produce companies to share production and costs materials. The acquisition is expected to 150,000 tpa of SB-Latex for paper of new product development. The global be completed by Q3 2009. April 27, 2009 coating. June 24, 2009 food market for MCC is estimated to be more than US$86m. February 23, 2009 KP Chemical Co., the petrochemical Idemitsu Kosan, a Japanese petroleum arm of Korea’s Lotte Group, said Thailand company, and Mitsui Chemicals, a Monday that it has acquired a Japanese chemical company, have controlling stake in Pakistan PTA Ltd, formed a JV to optimize naphtha supply a Pakistani petrochemical company. SCG Chemicals Co, the petrochemical at their manufacturing complexes at KP Chemical bought a 75-percent stake division of the Siam Cement Public Co, Chiba, Japan. The JV will enable Idemitsu in the Pakistani company from ICI based in Bangkok, Thailand, plans to to reduce crude oil processing at its Omicron B.V. of the Netherlands, KP bring its upcoming polyolefins production Chiba refinery. The plan involves greater Chemical said. The Korean company facility in Rayong online in the first quarter consumption of imported naphtha plans to increase its stake in Pakistan of 2010 as scheduled. The firm intends through the joint use by Idemitsu and PTA by 90 percent through a tender to export products from the new plant to Mitsui of the Chiba refinery’s storage offer. June 2, 2009 India, China and Southeast Asia, where tanks and jetty, and the construction of demand remains high. June 19, 2009 additional loading facilities and naphtha Kumho Petrochemical Shenyang pipelines to supply the two ethylene Co, a JV between Korea Kumho PTT Chemical PCL (“PTTCH”), Thailand’s plants. Separately, Mitsui says it will Petrochemical Co and China’s largest olefins maker, planned to sell cease production at Chiba and Iwakuni- Shenyang Chemical Industry bonds worth US$135bn, with expected Ohtake, Japan of C9 petroleum resins Construction Investment Co, will maturities of 7-10 years, in the third in March 2010. Financial details of the construct a new plant in Shenyang quarter, to help finance its investment. transaction were not disclosed. May 25, in Northeast China. The plant will PTTCH has said it planned to invest 2009 produce 12,800 tpa of commercial US$1.2bn during 2009-2013, of which 6 a s i a n S P e ci a l t y C h e m ic als newsletter j une 2009, Issue 59

US$734m would be spent this year to To submit stories to future editions of this boost olefins capacity by 100,000 tpa newsletter, please contact Mr. Marc Liu in New and propylene by 50,000 tpa. PTTCH York on 212-265-5300 or email mliu@bdallc. produces ethylene and propylene for com packaging and other industries. June 21, 2009

Vietnam SP Chemicals (Singapore) has cancelled previously announced plans to build a $1.5bn petrochemical complex in Vietnam, citing unfavorable market and economic conditions. The complex would have been built at Hoa Tam and was to have featured a naphtha cracker with capacity for 800,000 MT of ethylene. May 25, 2009

Selected Asian Chemicals Transactions with Multiples (12 months ending in 23Jun09)

Acquirer Announce Date Target Name Target Country Acquirer Name Deal Value Acquisition Type EV / EBITDA EV / Revenue P/E Country

2-Jun-09 Shinnika Thermal Ceramics JP Krosaki Harima Corp JP $15.0 50% ACQ - 0.9x 22.4x

5-Apr-09 Kingboard Copper Foil Holdings JP Kingboard Laminates Holdings Ltd JP $12.0 36% ACQ 1.5x 0.2x 6.6x

30-Jan-09 Wavelock Holdings Co JP Wavelock Investment JP $150.0 100% ACQ 17.0x 0.7x 53.5x

16-Nov-08 Hempel-Hai Hong (China) Limited HK Hempel AS Denmark $148.0 64% ACQ - - 7.6x

11-Nov-08 Lucite International Ltd UK Mitsubishi Rayon Co Ltd JP $1,600.0 100% ACQ 7.1x 0.9x -

22-Jul-08 Cognis Oleochemicals Group Malaysia PTT Chemical International Private Limited Thailand $164.0 50% ACQ - 0.4x -

21-May-08 TK Chemical Co Ltd SK North Asia Strategic (Singapore) Pte Ltd SI $50.0 33.7% ACQ 1.9x - -

28-Apr-08 Deuchem Co Ltd TW Elementis Holdings Limited UK $81.0 100% ACQ 7.2x 1.1x 11.0x

28-Mar-08 ICI India Ltd (Adhesive business) IN HENKEL AG & CO KGAA VORZUG GE $65.2 DIV - 2.1x -

Source: Bloomberg, BDA 6 a s i a n s p e ci a l t y C h e m ic als newsletter j une 2009, Issue 59

ccd Business Development Asia is an New York London investment banking firm which assists Euan Rellie, [email protected] Andrew Huntley, [email protected] multinational companies in expanding Charles Maynard, [email protected] Business Development Asia Ltd their businesses in Asia through JVs, Business Development Asia LLC 33 Cavendish Square The Economist Building, 11th Floor London W1G 0PW, United Kingdom acquisitions, divestments and capital 111 West 57th St, New York, NY 10019 T (44) 2071824518 raising. For further information on T (212) 265-5300 F (44) 2071824100 F (212) 265-4300 BDA’s services or on any of the articles in this newsletter, please contact the offices listed. Bahrain Mumbai Tamer Makary, [email protected] Rohit Singh, [email protected] Business Development Asia Business Development Asia Building #2572, Road #2833, 4th Floor, Office 898 Notan Plaza, Suite 4A #42, Block #428 Turner Road, Bandra (West) PO Box 30295, Seef District Mumbai 400050, India Manama, Bahrain T (91) 22-2643-0290 T (973) 17581336 F (91) 22-2643-0291 F (973) 17581483

Euan Rellie Hong Kong Shanghai Senior Managing Director Paul DiGiacomo, [email protected] Jeffrey Wang, [email protected] [email protected] Business Development Asia (HK) Business Development Asia Co Ltd #1206 Lippo Centre, Tower 1 The Center, #1602, 989 Changle Road 89 Queensway, Hong Kong Shanghai 200031, China Tanya Wang, Associate twang@ T (852) 2537-9565 T (86) 21-5407-5580 bdallc.com F (852) 2537-4406 F (86) 21-5407-5680

Alexander Ditchfield, Analyst SEOUL TOKYO [email protected] Heejun Yang, [email protected] Jeff Acton, [email protected] Business Development Asia Business Development Asia K.K. #1201, Gwanghwamun Officia 4F, T3 Gates 163 Sinmunno 1-Ga, Jongno-Gu 3-8-25 Toranomon, Minato-ku www.bdallc.com Seoul 110-999, Korea Tokyo 105-0001, Japan [email protected] T (82) 2-3276-3150 T (81) 3-3433-5803 F (82) 2-3276-3155 F (81) 3-3433-5269