Private equity investor Advent International has agreed to sell German PVC producer Vinnolit to Houston, Texas-based US petrochemical producer Westlake for €490 million ($668 million).

The US company, which will finance the acquisition with existing cash and credit facilities, expects the deal to close in the third quarter of 2014. With the buy, Westlake will move into sixth position in the PVC market worldwide.

A joint venture between the now-defunct chemical giant Hoechst and its then-subsidiary Wacker Chemie from 1993, Vinnolit was acquired by Advent in 2000, a time when efforts toward consolidation in the German PVC sector were beginning to get under way.

Shortly after buying the PVC business, Advent also took over the company's upstream businesses from Wacker, keeping operations back-integrated.

Several attempts by Advent to exit the PVC business, in part through a merger with other players, failed. Nevertheless, Vinnolit was able to invest in its production facilities as well as R&D while also making acquisitions during the unusually long 15 years in the hands of private equity.

Under Advent's ownership, the German company in 2006 became one of the first to convert its chlor-alkali-electrolysis plants to an environmentally friendly and energy saving membrane process. Over the years, it also invested some €1 billion in the modernization and expansion of its European asset base.

Acquisition of the paste PVC business from Ineos Chlor Vinyls in 2007, following Ineos' takeover of the PVC business of Norsk Hydro, significantly increased Vinnolit's production capacity and cemented the German company's position as Europe's leading producer of paste PVC.

World's sixth largest PVC producer

With total sales of €917 million /($1.2 billion) in 2013 and PVC output capability nearing 800,000 t/y, Vinnolit operates six state-of-the-art production platforms in Europe, including five in Germany and one in the UK. Its capacity for feedstock VCM totals 665,000 t/y, and it also can produce 475,000 t/y of membrane grade caustic soda.  

Westlake, with production facilities in the US and China, has PVC capacity of around 1 million t/y. With sales of $3.76 billion in 2013, its assets are currently olefin-heavy, with a split against PVC of around two-thirds to one-third. Following the Vinnolit acquisition, the mix will be about half and half.

Westlake's new German arm will become Europe's largest player following the planned merger of the region's two market leaders Ineos and Solvay, with total capacity of 2.3 million t/y.

In future, Ineos-Solvay will be world's second largest PVC producer, behind Japan's Shin-Etsu, with Westlake-Vinnolit ranking six behind the two leaders, Formosa, LG and Chem China.

Westlake CEO Albert Chao called Vinnolit "an excellent strategic fit." He said the acquisition "will allow us to expand our chlorvinyl business globally and add important specialty PVC products and technology to our existing portfolio."

"We have transformed Vinnolit into the leading specialty PVC manufacturer and remain dedicated to further growing the company's business," said the company's managing director, Josef Ertl.

No details have been revealed as to future management and operational structure of the merged company.