BP is set to sell its global petrochemicals business to London-headquartered INEOS in a deal worth $US5 billion ($7.27 billion).
BP stated that the agreed sale was a strategic step in reinventing the company and strengthening of its balance sheet.
As part of the agreement, INEOS will pay BP a deposit of $US400 million and pay a further $US3.6 billion upon completion, with an additional $US1 billion deferred and paid in four instalments until June 2021.
BP’s petrochemicals business is focussed on aromatics and acetyls, each of which boasts leading technology and advantaged manufacturing plants, including a strong presence in growth markets in Asia.
The aromatics business is a global leader in the production of purified terephthalic acid (PTA), a key feedstock for the manufacture of polyester plastics, and its precursor paraxylene (PX).
The acetyls business produces acetic acid and derivatives such as acetic anhydride, which have uses in a wide range of sectors.
BHP chief executive Bernard Looney said the businesses had interests in 14 manufacturing plants in Asia, Europe and the United States, and produced 9.7 million tonnes of petrochemicals in 2019.
“This is another significant step as we steadily work to reinvent BP. These businesses are leaders in their sectors, with world-class technologies, plants and people,” Looney said.
“In recent years they have improved performance to produce highly competitive returns and now have the potential for growth and expansion into the circular economy.”
Looney stated that the decision could come as a surprise, but the company will do its best to minimise uncertainty and is confident that the businesses will thrive as part of INEOS.
“As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction,” Looney said.
INEOS is a leading global chemicals company with a network spanning over 180 sites in 26 countries, and a workforce of 22,000 people worldwide.
Over the past two decades, INEOS has acquired a number of businesses from BP, most notably the $9 billion purchase of Innovene in 2005, a subsidiary that comprised the majority of BP’s then chemicals assets and two refineries.
As a result of the latest sale, BP has reached its $US15 million target in divestments a year ahead of schedule.
BP chief financial officer Brian Gilvary, who led the negation with the owners of INEOS, added that BP had a long relationship with INEOS and it reflected the range and quality of options available to the company.
“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,” Gilvary said.
INEOS founder and chairman Jim Ratcliffe added: “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.”