RELIANCE BUYS ASSETS OF MALAYSIAN POLYESTER COMPANY

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RELIANCE Industries has further cemented its position as the world’s biggest polyester producer by agreeing to buy the assets of Hualon Corp, a sick Malaysian entity.

Upon completion, the deal will increase Reliance’s polyester capacity by 25% to 2.5 million tonnes and boost annual revenues by about $1 billion, a company statement said.
Reliance, which had captured India’s polyester market in the 1980s and 1990s through aggressive capacity build-ups and cheap acquisitions, is now looking to expand overseas. The Hualon buy is part of that strategy.

In 2004, it bought Trevira, a specialised polyester firm, for about $80 million. That acquisition gave it access to a niche product range of filaments and fibres. Hualon, in contrast, makes commodity polyester yarn and fibre and cloth. The buy gives Reliance about 500,000 tonnes of yarn and fibre capacity, besides plants in two other locations for other textile products.

Additional capacity apart, the buyout will give Reliance access to Hualon’s clients, which include some of the world’s largest retail chains. Hualon, incidentally, is among Malaysia’s top five exporters and its two plants churn out fabric that are used by major textile and retail firms around the world. Reliance will control 7% of the world’s polyester yarn and fibre market after the takeover, the company said.

A Reliance spokesperson declined to disclose the price of the acquisition. As it involves only the company’s assets and not liabilities, the amount is unlikely to be large.

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