Cognis Deutschland GmbH announced Wednesday that it has agreed to expand its oleochemicals joint venture with a Malaysian plantation owner by contributing wholly-owned operations, including oleochemicals plants in the United States and Germany.
The Malaysian partner is Golden Hope Plantations Berhard, and the joint venture is Cognis Oleochemicals Sdn, which is based in Malaysia. Cognis recently formed its wholly owned oleochemicals operations into a separate business to prepare for just such a disposition.
The German specialty chemical supplier said the agreement will make the oleochemicals operations more competitive while allowing Cognis to focus on its higher margin businesses. Officials have said that oleochemicals have in recent years become a commodity, volume-driven market.
This new oleochemical organization will have greater freedom to respond to global market needs and will benefit from the advantages offered by three regional businesses based on a single, globally-integrated supply chain, Cognis Chief Executive Officer Antonio Trius said.
The operations that Cognis is contributing were carved out as Cognis Oleochemicals LLC on July 1. It includes plants in Cincinnati and Dusseldorf, Germany, that process crops and animal fats into oleochemicals. Some of those oleochemicals are sold, while Cognis uses the rest to manufacture synthetic lubricants as well as specialty chemicals used in the foods, detergents, cosmetics, coatings, textiles, mining and other industries. Cognis will retain the latter operations as wholly owned businesses.
The contributed operations employ 700 people, including sales personnel in Germany, the United States and Canada. The joint venture already employs 400.
Cognis said the expanded joint venture will be among the worlds largest oleochemicals suppliers, with annual revenues of $850 million.
One of Malaysias largest publicly owned companies, Golden Hope owns 190,000 hectares of oil palm plantations in Malaysia and Indonesia. Officials said the agreement with Cognis will benefit the company by giving it better access to Europe and North America. Cognis and Golden Hope said they still need to flesh out details of their agreement but that they plan to complete the transaction by the end of 2005.
Disclosure of the talks with Golden Hope led 250 union employees at Cognis Cincinnati plant to strike in February. Members of United Steelworkers of America Local 14340 said they wanted guarantees that their jobs would remain secure in the event of some change in ownership. The union members remain on strike, but Cognis has hired replacements and says the plant is operating normally.