BP has sold its global petrochemicals business to Ineos for US$5Bn in a decision the company termed “the next strategic step” as it seeks to ease the pressure on its balance sheet
Ineos will take on BP’s aromatics and acetyls businesses. BP’s aromatics business produces purified terephthalic acid used to manufacture polyester plastics.
The acetyls business produces acetic acid and derivatives such as acetic anhydride and has a diverse base with manufacturing plants in the US, the UK, China, South Korea, Taiwan and Malaysia. The sale will include related interests in the plastic recycling technology BP Infinia and BP’s interest in acetylated wood developer Tricoya.
BP chief executive Bernard Looney said the sale is a step towards reinventing BP. “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.”
Shares in BP rose by 3.5% to £3.15 (US$3.87) following the announcement and the company said the 1,700+ staff in these businesses are expected to transfer to Ineos on completion of the sale. BP chief financial officer Brian Gilvary said the agreement means BP has now met its US$15Bn target for agreed divestments a year ahead of schedule.
Over the last two decades London-based Ineos, led by Jim Ratcliffe, has acquired a number of businesses from BP, notably the 2005 US$9Bn purchase of Innovene, the BP subsidiary that comprised the majority of BP’s then chemicals assets and two refineries.
Ineos will pay BP a deposit of US$400M, followed by US$3.6Bn on completion of the deal and US$1Bn in by the end of June 2021. The deal, subject to regulatory approval, is expected to complete by the end of 2020.
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