DSM Elastomers to raise prices as sale progresses
By David Shaw, ERJ staff
Brussels -- DSM Elastomers has said its sale is progressing, but it cannot give any details until it has prepared the sale documents, which are expected to be ready by the end of Summer.
Meanwhile, the new management has decided in the last few weeks that the oil price is unlikely to come down, so it is expecting to raise prices for its EPDM and Sarlink products in very near future.
Until a few weeks ago, said Jan Paul de Vries, president of DSM Elastomers, the company has taken the view that the oil price surge was temporary, and had absorbed most of the increases in costs. Now, however, it has decided that the oil price is unlikely to come down in the short term, and intends to recover some of the margins lost in recent months as raw materials prices have increased.
De Vries showed charts indicating that the industry price of EPDM has risen by about 5 percent in Europe and 10 percent in Asia in the last 12 months, whereas raw material prices have increased much faster. He did not say how much prices are likely to rise, but said he intends to get margins back to sustainable levels.
Meanwhile, the company is preparing itself for a demerger from the DSM group and a sale. De Vries said DSM fully expects both the Keltan (EPDM) and Sarlink (TPV) activities to be sold together to the same buyer, and that it intends to find a buyer who will commit to growth and expansion of both businesses in the long term.
Currently DSM is ensuring that ownership of land, assets and other details are clear, and that agreements are in place to permit the business to continue in the long term, once the Elastomers unit is de-merged. Simultaneously, the company is going through due diligence with financial consultants and preparing all relevant documents for potential buyers to view under confidentiality agreements. This phase of the process will be complete by 1 September, de Vries said.
Prior to that time, DSM is unable to make any comment on potential purchasers of the unit. While there had been interest, said de Vries, it was pointless to speculate on potential buyers until it was clear what was being purchased and the apparent value of those assets. De Vries said he expected to move to the new ownership organisation once the deal is complete. He estimated that once the sale documents are ready, it might take anything from 12 to 24 months to complete a deal.
If DSM group is unable to get the right price for the business, said de Vries, he expected that the unit would continue to operate under DSM ownership until such time as the market conditions allowed a suitable price to be achieved.
In the mean time DSM Elastomers is continuing to develop the business and is working on new business oppportunities.
More on this interview in the coming issue of ERJ
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