Bulgaria's Integra Plastics, which operates the only plastic bag recycling plant in the region, will be acquired by Austrian specialty chemicals company Borealis, a majority-owned subsidiary of oil and gas giant OMV. The facility is based in the town of Elin Pelin near Sofia and was built five years ago by the owner of Bulgaria's largest sunflower oil producer, Oliva, as a side business. The deal is expected to be completed in the first quarter of 2024.
On the buyer's initiative
Borealis is acquiring a 100% stake in Integra Plastics, an advanced mechanical recycling player based in Bulgaria, OMV Group said in a press release. The price of the transaction was not disclosed but judging by the company's gross profit of 14 million levs (7 million euro) in 2022, the valuation probably amounts to tens of millions of euro. Closing of the transaction is subject to regulatory approvals, which are expected to be received by February.
"The deal is made on the initiative of Borealis, which has been interested in the Bulgarian plant ever since it was opened in 2019. The negotiations continued for about a year and included intensive due diligence," Yulian Stefanov, CEO of Integra Plastics, told the Capital Weekly. Majority shareholder in Integra Plastics with 92.67% of the capital is Betainvest of Angel Georgiev, the owner of grain wholesaler Buildcom that is majority owner of Oliva. The sunflower oil producer had a revenue of more than 3 billion levs and a net profit of 210 million levs in 2022. Cyprus-registered Vallenova, represented by Greek citizen Konstantinos Ziogas, holds the remaining 7.33%. At a general meeting in late November Ziogas was dismissed from the board of directors.
"The reasons for the sale are strategic. The line of business of Integra Plastics is different from that of Oliva and Buildcom, so we cannot achieve vertical integration. At the same time, Borealis is a very well market-oriented company and will attain that goal more easily," Stefanov explained.
In his words, the plant in Elin Pelin will keep its line of business after the deal and will develop with fresh investment from the Austrian owner. The seller will focus on its core businesses.
"In line with Borealis' Strategy 2030, we continue making steady progress on our circularity journey by reinventing essentials for sustainable living. The addition of Integra Plastics will strengthen our ability to deliver on our advanced mechanical recycling ambition and enable our customers to meet their sustainability targets," the Austrian company said in a press release.
The Bulgarian plant
The plant in Elin Pelin was opened in the summer of 2019 and started effectively operating in early 2020. At the time, the management team commented that the decision to enter the recycling business was prompted by China's refusal to accept Europe's plastic waste, which opened a big market niche.
The investment in Integra Plastics amounted to 40 million levs and was financed with own funds and bank loans. The facility spans nearly 35,000 sq. m and processes 40,000 tonnes of plastic waste a year, producing 20,000 tonnes of recycled material in the form of high-purity (99.7%) granules. The process is automated and includes pre-sorting, optical sorting, washing, drying and extrusion.
The main customers are companies from Germany, Switzerland, the Netherlands and Spain. Integra Plastics employs some 120 people. Its revenue rose to 43 million levs in 2022, from 21 million levs in 2021. It swung to a net profit of 7.8 million levs in 2022 from a 2.5 million levs loss in the year prior. Its latest financial report shows the company's liabilities to banks and connected persons exceed 51 million levs.
"We do not expect an increase in revenue in 2023, because of the lower prices. It was a harsh year for the entire recycling industry due to the recession in Germany and China," Stefanov said.
Bulgaria's Integra Plastics, which operates the only plastic bag recycling plant in the region, will be acquired by Austrian specialty chemicals company Borealis, a majority-owned subsidiary of oil and gas giant OMV. The facility is based in the town of Elin Pelin near Sofia and was built five years ago by the owner of Bulgaria's largest sunflower oil producer, Oliva, as a side business. The deal is expected to be completed in the first quarter of 2024.
