Utility Buying Emery’s Asian Unit

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The joint venture owners of esters supplier Emery Oleochemicals have agreed to sell the Asia-Pacific portion of that business to a new joint venture between a Malaysian utility company and a venture capital firm.

To allow the transaction, Emery will be split into two regional stand-alone units. The North American and European operations of Emery Oleochemicals and Emery Specialty Chemicals will be renamed Emery Group and folded into Emery Oleochemicals UK Ltd., which will be retained by Sime Darby Plantation Bhd. and PTT Global Chemical as a 50-50 joint venture.

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Emery’s Asia-Pacific operations will be purchased by Edenor Technology Sdn for 243 million Malaysian ringgits (U.S. $57.3 million) in cash and debt assumption. Edenor is a 50-50 joint venture between Malaysian utility Mega First Corp. and Hong Kong investment firm 9M Technologies. Edenor was formed specifically for this purchase.

Sime Darby is one of the world’s largest palm plantation operators, with plantations primarily in Malaysia, Indonesia and Papua New Guinea. Emery was formed to process the oil milled from those plantations into value-added products, including fatty acids, fatty alcohols, refined glycerine, methyl esters and other oleochemical derivatives. Emery has a bio-lubricants unit that supplies palm-based base stocks and chemical additives for metalworking fluids, greases and other industrial lubes.

The Asia-Pacific operations include manufacturing facilities on 34 acres of industrial land in Telok Panglima Garang, near Port Klang, Malaysia, and pipelines supplying refined palm oil.

Mega First is headquartered in Petaling Jaya, part of the greater metropolitan area of the capital Kuala Lumpur. It supplies energy from hydro- and solar-powered sources but also operates limestone quarries and a plantation in Cambodia and supplies paper and plastic packaging.

In its own announcement yesterday, Mega First said the acquisition fits its long-term goals of supporting sustainable economic development, and it cited forecasts that the global oleochemicals market will grow at a cumulative annual rate of nearly 6% through 2027 due to the shift to renewable materials. Mega First acknowledged that Emery’s Asia-Pacific operations have lost money in recent years, but it maintained that Mega First and 9M believe they have the experience and expertise turn them around.

Because those operations currently have RM 205 million in debt, the Edenor is only laying out RM 38 million in cash.

Mega First added that it plans to expand into other plantation crops, such as coconuts.