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BP to sell petrochemicals business to Ineos

6/29/2020
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BP has agreed to sell its petrochemicals business to Ineos for $5 billion, encompassing the whole of BP’s worldwide aromatics, acetyls, and related businesses. Ineos says it will pay $4 billion on completion with the remaining $1 billion deferred until June 2021 “at the latest.” A deposit of $400 million will initially be paid to BP by Ineos, with a further $3.6 billion on completion, with the transaction expected to be completed by the end of the year subject to regulatory and other approvals, BP says. An additional $1 billion will be deferred and paid in three separate installments of $100 million in March, April, and May 2021, with the remaining $700 million payable by the end of June 2021, it says. Ineos Styrolution, the wholly owned styrenics subsidiary of Ineos, will be the formal acquirer of BP’s businesses. Proceeds from the sale will be used by BP for general corporate purposes.

BP’s petchems segment is focused on two main businesses, aromatics and acetyls, with interests in 14 manufacturing plants in Asia, Europe, and the US. In 2019 the business produced 9.7 million metric tons of petrochemical products, says BP. The company has a “strong presence in growth markets in Asia,” it says. The sale will also include related interests, such as the chemical recycling technology BP Infinia and the company’s interest in acetylated wood developer Tricoya. The businesses included in the transaction together employ more than 1,700 staff worldwide, with these employees expected to transfer to Ineos on completion, BP says.

The sale is the “next strategic step in reinventing BP,” will strengthen the company’s balance sheet, and delivers on its $15-billion target for agreed divestments a year earlier than originally scheduled, according to BP. Strategically, the petchem division’s overlap with the rest BP is limited, and it would take “considerable capital” for BP to grow these businesses, says BP CEO Bernard Looney. “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.”

Ineos says the acquisition will extend the company’s portfolio and geographic reach. “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,” says Ineos chairman Jim Ratcliffe. Ineos has acquired several businesses from BP over the past two decades, most notably the $9-billion acquisition in 2005 of Innovene, which at that time comprised the majority of BP’s petchem assets including olefins, and two refineries.

BP’s aromatics business is a world leader in the production of purified terephthalic acid (PTA) and para-xylene (p-xylene), and it licenses its PTA production technology to other producers worldwide. The business’s largest manufacturing plants are in China, the US, and Belgium. The acetyls business produces acetic acid and derivatives such as acetic anhydride, with a diverse base and manufacturing plants in the US, UK, China, South Korea, Taiwan, and Malaysia, according to BP.

Ineos says the aromatics business has six sites supplying the worldwide polyester business and that the acetyls segment has nine sites producing acetic acid and a range of derivatives. The deal “is a good fit with Ineos’s existing asset base, reintegrating the Hull [UK] site and expanding the existing Ineos footprint at Geel, Belgium,” it says. Of the 15 sites included in the transaction, five are located in the Americas, two in Europe, and eight in Asia, with BP’s petchems business also including 10 “leading joint ventures,” Ineos says.