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Asia: ThaiOil management seeks to conduct study on Esso acquisition

https://www.chemnet.com   May 09,2011 Platts
Refiner ThaiOil's management has asked the company's board of directors to allow it to conduct a feasibility study on a possible takeover of Esso Thailand, ThaiOil CEO Surong Bulakul said Friday.

Surong's comment came after local media reported that ThaiOil's board met on April 29 to consider buying ExxonMobil's 65.43% stake, or 2.264 billion shares, in refiner Esso Thailand.

Reports said the board agreed to conduct due diligence on Esso, and agreed in principle for an investment budget of around Baht 50 billion ($1.66 billion). The funds are expected to come from cash the company is holding and borrowings, according to the reports.

Surong, however, denied reports on the due diligence, saying that "the company is just studying [the possibility] and hasn't officially discussed the matter with ExxonMobil."

The ThaiOil CEO first expressed an interest in acquiring Esso in March this year. He said at the time that ThaiOil was interested in taking over Esso, particularly to integrate Esso's refinery-petrochemical facility in Sri Racha with ThaiOil's larger complex next door, and was conducting a study.

A source close to ExxonMobil, however, last month ruled out selling the Thai unit. "It's a one-sided story. Do you think a company with a 117-year history in the country and which is investing $400 million in a refinery upgrade would want to sell and leave just like that?," the official, who asked to remain anonymous, said April 13.

ThaiOil sees investment on expansion as necessary, especially after the merger of PTT Aromatics and Refining and PTT Chemical, a source close to ThaiOil said Friday. The PTTAR and PTTCH merger has turned ThaiOil into the smallest company of its kind, the source added.

Apart from studying acquiring Esso, Thaioil is also looking for other investment opportunities, the source who asked not to be named, said. Esso, in which ExxonMobil has a controlling stake of 65.43%, runs a 177,000 b/d refinery and a 500,000 mt/year paraxylene plant at Sri Racha, about 125 km southeast of Bangkok. ThaiOil, nearly half-owned by the state-owned PTT, has a refining capacity of 275,000 b/d, representing about 25% of Thailand's total. It also runs petrochemical and lubricant businesses via subsidiaries.
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