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Fourth time’s a charm; Mexichem acquires Wavin after raising bid for a fourth time

Mexico's Mexichem S.A.B. de C.V. has bid to acquire Netherlands based Wavin for just over a half a billion euro's, paying euro 531 million, or euro 10.50 for each Wavin ordinary share, to create a euro 4 billion plastic pipe firm that hopes to leverage the combined companies' design, engineering, and R&D capabilities with Mexichem's low-cost manufacturing. Wavin will retain a separate operating and legal structure with headquarters in Zwolle.

Mexichem initially made an unsolicited bid for Wavin's outstanding shares last November. At that time, Wavin said in a release it had noticed what it called "recent movement in its share price", reflecting the takeover bid. On Nov. 23, Mexichem made a formal offer of euro 8.50 per ordinary share, and by Dec. 6, in increased the offer price per share to euro 9.00. On Dec. 23, Mexichem increased its offer further, to euro 10/share, at the same time being granted access by Wavin to undertake a confirmatory due diligence investigation, that it expected to start in the second week of January 2012.

The companies say the combined group will have a more diversified end-market profile spread across the residential, non-residential and infrastructure segments, "exposing it to different economic and construction cycles," per a release.

Mexichem, which was the name given in 1998 to the industrial group comprising Química Pennwalt SA de CV and Polímeros de México SA de CV, has made a string of acquisitions in the polyvinyl chloride (PVC) supply chain, as well as in the PVC pipe extrusion market. In 2008, those acquisitions included: Colombian PVC pipe maker Colpozos; Plastubos, a Brazilian manufacturer of PVC pipe; and Argentinean firm Dripsa, which makes pipes for agricultural use.

Following these purchases, Mexichem created a new subsidiary called Mexichem Soluciones Agrícolas. The entire company has 95 plants in 19 countries, with sites in Taiwan, Japan, and the United Kingdom, joining facilities spread throughout the Western Hemisphere from Canada to Argentina and Chile.

Wavin employs 6400 across plants in 26 counties, with revenue of euro 1.2 billion, calling itself the "leading supplier of plastic pipe systems in Europe."

The world plastic pipe market is projected to expand 7.3% annually through 2015, according to The Freedonia Group, with high-density polyethylene (HDPE) and smaller-volume plastic pipe products expected to outpace PVC's growth.

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