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INEOS purchase BP petrochemicals business for $5 billion

29/06/2020
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Global chemicals giant INEOS have agreed to purchase bp’s petrochemicals business for $5 billion.

bp's aromatics and acetyls business will transfer to INEOS for $5 billion
(Image via bp)

The business covers aromatics and acetyls and comprises 15 sites across the world (5 in the Americas, 2 in Europe and 8 in Asia) plus 10 leading joint ventures. Around 1,700 staff are employed and are expected to transfer to INEOS on completion of the sale.

The decision to sell the these assets is part of a “strategic transformation” for bp, according to CEO Bernard Looney who said in a LinkedIn post:

“today is one more deliberate step – in a step-by-step process – as we reimagine energy and reinvent bp to succeed through the energy transition. It focuses our portfolio and strengthens our balance sheet – all part of building a leaner, faster-moving, lower carbon and more competitive company.”

He went on to acknowledge the bp workers who will be affected by the announcement:

“I recognize this move will be a surprise to colleagues in these businesses. I’m sorry about that. We will be there to support them as they move to INEOS – and we are sad to see them leave the bp family. But I’m confident they will be well-placed to thrive as part of a global leader in petrochemicals. And ultimately, I genuinely believe this is the right decision at the right time – for them, for INEOS, and for bp.”

1,700 workers will be affected by the sale and are expected to move over to INEOS
(Image via bp)

INEOS, as one of the world’s leading petrochemical companies, will see their portfolio strengthened and their geographic reach extended by the purchase of these businesses. They will be run by the subsidiary INEOS Styrolution.

The aromatics side of the business is a global leader in the production of paraxylene (PX) and purified terephthalic acid (PTA) - a key feedstock for polyester plastics manufacturing. The acetyls business produces acetic acid and derivatives such as acetic anhydride which are used in a wide range of sectors. In total the businesses produced 9.7 million tonnes of petrochemicals in 2019.

The sale also includes related interests including bp Infinia (a chemical recycling technology) and bp’s interest in acetylated wood developer Tricoya.

“This acquisition is a logical development of our existing petrochemicals business extending our interest in acetyls and adding a world leading aromatics business supporting the global polyester industry,” said Sir Jim Ratcliffe, founder and chairman of INEOS.

The deal is subject to customary adjustments, with agreed terms for INEOS to pay an upfront deposit of $400 million and a further $3.6 billion upon completion. An addition $1 billion will be deferred and paid in three separate instalments of $100 million in March, April and May 2021 with the remaining $700 million payable by the end of June 2021. Completion is expected by the end of 2020.

Looney reiterated his support for the move as a transformation in bp’s core business in a statement:

“I am very grateful to our petrochemicals team for what they have achieved over the years and their commitment to bp. I recognise this decision will come as a surprise and we will do our best to minimise uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.

“Strategically, the overlap with the rest of bp is limited and it would take considerable capital for us to grow these businesses. As we work to build a more focused, more integrated bp, we have other opportunities that are more aligned with our future direction. Today’s agreement is another deliberate step in building a bp that can compete and succeed through the energy transition.”

Brian Gilvary, bp’s chief financial officer added:

“With today’s announcement we have met our $15 billion target for agreed divestments a full year ahead of schedule, demonstrating the range and quality of options available to us.”

“bp has had a long relationship with INEOS and this agreement reflects the mutual respect and trust that exists between us. It is a strategic deal for both parties that recognises both the high quality of the businesses and that INEOS is in many ways a natural owner for them."

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INEOS purchase BP petrochemicals business for $5 billion - Time to read 4 min
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