Mexico’s Alpek offers $620mn to buy Octal

Muscat – Alpek, a leading multinational petrochemical company incorporated in Mexico, has offered to acquire 100 per cent stake in Salalah-based Octal for a consideration of US$620mn.

Octal, producer of thermoforming PET sheet and a leader in the clear rigid packaging industry, announced Tuesday that its shareholders have entered into an agreement to sell their 100 per cent stake to Alpek.

The Mexican chemical giant in a statement on its website said, ‘Alpek will purchase 100 per cent of Octal’s shares for US$620mn on a debt-free basis. Financing for the acquisition will be secured through cash on the company’s balance sheet, free cash flow generated from existing businesses, and dedicated bank loans.’

This acquisition, Alpek said, forward-integrates Alpek into the high-value PET sheet business segment, closes the gap towards achieving its ESG goals, and enhances its ability to serve its customers’ growing PET resin needs.

Oman’s largest financial institution Bank Muscat on Wednesday said that it is one of the minority shareholders in Octal Holding with 4.99 per cent stake.

‘Alpek has offered its interest to acquire 100 per cent stake in Octal to shareholders of Octal for a total consideration of US$620mn subject to customary adjustments,’ Bank Muscat confirmed in its disclosure to the Muscat Stock Exchange.

The bank notified the stock market that it has signed an agreement to sell its stake in Octal, along with all other shareholders of Octal to Alpek.

‘The carrying value of this investment [in Octal] in the bank’s book as of December 31, 2021 was RO4.2mn,’ Bank Muscat said.

The bank’s disclosure added that Bank Muscat’s 4.99 per cent stake in Octal on proportionate basis amounts to approximately RO11.9mn (or US$31mn).

‘Accordingly, Bank Muscat has agreed to proceed with the transaction to sell its stake in Octal by signing the necessary agreements,’ the bank added.

The completion of the acquisition of Octal by Alpek is subject to customary closing conditions agreed between Alpek and Octal, including receipt of regulatory approvals by Alpek.

‘Bank Muscat will inform the market once its stake sale in Octal is completed,’ Bank Muscat added.

With its proprietary direct-to-sheet manufacturing technology and early adoption of advanced PET resin manufacturing processes, Octal has become a global leader in PET packaging. Established in 2006 in Salalah, Octal has grown into a globally recognized enterprise and a world leader in PET sheet, with manufacturing facilities and offices in Oman, the US, Saudi Arabia and the UAE and sales of over US$1bn.

Octal on Tuesday said that the transaction is expected to close in the first half of 2022, subject to customary closing conditions and regulatory approvals.

JP Morgan acted as exclusive financial advisor to Octal on the transaction and Latham & Watkins LLP were legal advisors.

Alpek is a leading producer of PTA and PET worldwide, the largest rPET producer in the Americas, the third largest expandable polystyrene manufacturer worldwide, and the only producer of polypropylene in Mexico. The company operates 32 plants in the US, Mexico, Canada, Brazil, Argentina, Chile, and the UK, and employs more than 6,000 people.