BP has today announced that it has agreed to sell its global petrochemicals business to INEOS for a total consideration of £4.1bn.
Under the terms of the agreement, INEOS will pay BP a deposit of £300m and will pay a further £2.9bn on completion. An additional £900m will be deferred and paid in three separate equal instalments in March, April and May 2021. Subject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.
BP’s petrochemicals business is focused on two main businesses – aromatics and acetyls – each of which has leading technology and advantaged manufacturing plants, including a strong presence in growth markets in Asia. In total, the businesses have interests in 14 manufacturing plants in Asia, Europe and the US and in 2019 produced 9.7 million tonnes of petrochemicals.
Bernard Looney, BP Chief Executive Officer said: “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. 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.
“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.”
INEOS is a global chemicals company with a network spanning over 180 sites in 26 countries, employing 22,000 staff worldwide.
Brian Gilvary, BP’s chief financial officer, led the negotiation with the owners of INEOS, added: “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.”
In total, the businesses included in the transaction currently employ over 1,700 staff worldwide. These staff are expected to transfer to INEOS on completion of the sale.