SEOUL, South Korea—TSRC Corp.'s recent purchase of Dexco Polymers L.P. is a deal that satisfies the cravings of all parties.
As executives from the two companies—who discussed the acquisition while attending the International Institute of Synthetic Rubber Producers Annual General Meeting in Seoul April 11-14—see it, the sale:
— Gives Taiwan's largest SR producer a solid thermoplastic elastomer supplier in the U.S., as well as its first production presence outside Asia;
— Offers a distinct marketing opportunity for Dexco to expand beyond its North American base, and TSRC in North America and Europe;
— Sets the table for technology cross-breeding, which the companies expect will enhance their product mix; and
— Provides the previous owners with the $168 million purchase price, and a successful conclusion to a long-running joint venture.
There are plenty of other reasons for the new owner and the former Dow Chemical Co./ExxonMobil Chemical Co. joint venture to be happy with the deal. Technology and marketing opportunities are the most important factors, though, according to Wei-Hua Tu, TSRC president and CEO.
TSRC—until 1999 known as Taiwan Synthetic Rubber Corp.—is strong in Asia with plants in Kaohsiung, Taiwan, and Nantong, China, producing polybutadiene, SBR and nitrile rubber, as well as styrenic block copolymer TPE. But the firm needed to obtain production capacity to serve North American and European customers, Tu said.
“It is very important for TSRC to become a global company,” he said. The deal propels TSRC to fifth among the world's producers of SBC, from eighth.
Frank J. Chen, vice president of the TSRC research and development division, said the Taipei, Taiwan-based parent and Houston-headquartered subsidiary have different, but complementary, technology. TSRC produces SBC for adhesives, industrial compounds and shoes, while Dexco's styrene-isoprene copolymer and styrene-butadiene-styrene TPEs are for more high-end applications, in adhesives, personal care and consumer products.
The company's aim is to be known as No. 1 in technology in its field, said Chris Mudd, Dexco Polymers president and general manager.
“We may not be the No. 1 in terms of capacity, but we're not concerned with capacity, but with our technology position in the world. We can become the Tier 1 technology leader,” said Mudd, who has been general manager of Dexco for eight years.
Dexco, which produces SBC at its plant in Plaque¼mine, La., said TSRC retained all of the wholly owned subsidiary's 70 employees. Tu and other TSRC senior executives made several trips to the production facility, and “did a great job of making the Dexco team feel welcome and feel very good about this acquisition.”
Mudd said the expectations are high at Dexco. “Together we're going to do something really big,” he said.
Dow and ExxonMobil alternated general managers at Dexco periodically since the joint venture was created in 1988, with Mudd coming over from the Dow side. As JVs go, Dexco had a long run.
“The good part is we've had a legacy of very good people, good technology, and those two companies are very focused on safety, environment and health,” Mudd said. The challenge was getting two very large parent companies to agree on business decisions.
“I think Dexco hit a plateau in terms of growth, and our ability to serve customers worldwide. For the past few years we kind of went sideways,” he said. “Now we have a brand new chance to serve customers worldwide.”
The parent companies never publicly announced the business was for sale, nor mandated that they absolutely would sell Dexco, Mudd said.
“I think they were seeing what interest was out there. And TSRC was a very good choice. We worked it out with hardly any issues.”
Does Dexco have enough production capacity, with the capability of making about 63,000 pounds of SBC annually? “There's never enough capacity,” Mudd said, to which Tu replied, “I like to hear that.” Asked if there will be an expansion coming soon to Plaquemine, however, Tu answered “Not yet.”
Mudd said Dexco's customers have been completely supportive of the change in ownership. The increased production capability and potential from the complementary technologies “is something that the customers have reacted to extremely positively,” he said.
Dexco has a strong name with its Vector line, said Hendrick Lam, TSRC vice president, Corporate Planning Division and Applied Polymers Business Division, who is in charge of marketing for the corporation. He said that brand name will continue for Dexco SBS and SIS TPEs. TSRC produces Taipol-brand SBCs—SBS, SIS and SEBS.
TSRC has several joint ventures throughout Asia, including Lanxess–TSRC (Nantong) Chemicals Industrial Co. Ltd. Construction of a nitrile rubber plant in Nantong by that partnership of TSRC and Lanxess A.G. is progressing, Tu said.
The $50 million project is scheduled to start up in the first half next year.
Tu said the Dexco purchase is TSRC's first in the West, but probably won't be the last.
“This is the first step. I think we will consider any other opportunity, but it must be related to our current business,” Tu said.