Indorama Ventures has agreed to take a controlling 65.72% stake in Avgol Industries, an Israeli manufacturer of nonwovens. The transaction is expected to complete during the second half of 2018, subject to regulatory approvals.

Avgol’s majority shareholder, HFH International, has agreed to sell its 50.76% stake to Indorama’s Spanish affiliate, while at the same time other shareholder Leumi Partners has agreed to sell it shares, which amount to a 14.96% stake.

Indorama said it has agreed to pay $1.62 per share for Avgol which is the world’s third largest manufacturer of nonwovens for hygiene applications and holds 10% of the global market. The company has six production sites in Israel, the US, Russia, China and India with a combined capacity of 203,000 t/y. It employs 900 people worldwide.

Commenting on the acquisition, Aloke Lohia, group CEO of Indorama Ventures, said: “With this acquisition, we are adding a company that has a distinctive position within a compelling segment and with strong growth prospects. Avgol has already made some significant investments to grow the business by expanding its production capacity and geographical footprint and we hope to capture the benefits and help the company reach further heights.”

According to the Thai group, the global hygiene market is projected to grow by 6-7% per year with demand being driven by growth in developing markets, especially in South America, Africa and Asia, notably China and India. In addition, the increased use of adult incontinence products, which use six times the number of fibers, is further accelerating the industry’s overall growth.

The deal follows the group’s purchase of M&G Polimeros Brazil, which was agreed in March. Indorama was one of the creditors of the Brazilian’s company’s parent, Italy’s Mossi Ghisolfi group, which filed for bankruptcy protection in October 2017.