Geon and OxyChem Agree to Joint Venture
The Geon Company announced this week a series of steps to create a stronger company with a new focus as an international performance polymer and services company.
As their first step, Geon has signed a non-binding letter of intent to enter into transactions with Occidental Chemical Corporation, a subsidiary of Occidental Petroleum Corporation, which, if completed, will create a joint venture of their polyvinyl chloride suspension resin businesses and related supporting operations. In addition, under the proposed transaction, Geon will acquire OxyChem's vinyl compound and film businesses at Burlington, NJ., and the companies will form a second joint venture devoted to powder compounding.
Staking out a competitive position in resins, the proposed joint venture is expected to be a low-cost manufacturer with substantial raw material resources, the financial strength to grow to meet customer needs and the ability to develop benchmark product and process technologies.
The proposed joint venture will distribute cash to the partners on an ongoing basis with earnings split in proportion to ownership. It will be headed by a chief executive officer and governed by a six person board comprising three representatives from each venture partner.
As previously described, Geon will acquire OxyChem's operations at Burlington, NJ. They include a business producing transparent vinyl compounds primarily for packaging, and another business producing flexible vinyl film. Geon will also receive OxyChem's rigid vinyl compounding business, which is being relocated to Pasadena,TX.
Under the proposed transaction, Geon and OxyChem also expect to form a second joint venture by combining their PVC powder, or dry-blend, compound businesses. This venture will be owned 90% by Geon and will include Geon's operations at Plaquemine, Louisiana, and Conroe, Texas, and OxyChem's facility at Pasadena.
With the inclusion of these new businesses, Geon's compound business will consume more than one billion pounds of PVC resin annually and another 200 million pounds of VCM for the company's dispersion resin operations
"Driving all our actions is our commitment to a strategy for earnings growth," said William Patient, chairman and CEO of Geon. "We have stated often that our goals are to establish Geon as a technology and service company with leadership in polymers."
The Geon Company, headquartered in Avon Lake, OH, is a leading North American-based polymer technology and service companywith operations in PVC compounds and other value-added products and services, as well as in PVC, resins.