In a $9 billion cash deal, British Petroleum plc has sold its Innovene polyolefins and olefins business to Ineos Group, a specialty chemicals maker in Lyndhurst, England.
Ineos Chief Executive Jim Ratcliffe described the deal, announced Oct. 7, as ``a transformational acquisition'' that makes his firm the world's fourth-largest independent petrochemicals maker. BP Chief Executive John Browne said Ineos' bid was ``the very best of a good number of offers.''
News of the deal comes less than a month after Chicago-based Innovene filed for an initial public offering with the Securities and Exchange Commission. The IPO, set for early 2006, was expected to raise as much as $1 billion.
London-based BP announced its intention to sell or spin off Innovene in early 2004. The unit posted a loss of $260 million last year.
The deal immediately makes Ineos one of the world's largest makers of polypropylene and high density polyethylene. It also dramatically alters the size of the firm, by adding Innovene's $24 billion annual sales total to the $6.1 billion in sales that Ineos posted last year.
Ineos also is adding 26 plants and 8,500 employees to its own totals of 46 plants and 7,000 employees. In PP, Ineos adds 5.7 billion pounds of annual capacity, and in HDPE, it's getting 4.8 billion pounds. It had no previous capacity for those materials.
Industry analyst Balaji Singh said Ineos is capitalizing on ethylene derivatives with a plan similar to that of Dow Chemical Co.
The acquisition ``fills out Ineos' ethylene and propylene derivative portfolio,'' said Singh, president of Chemical Market Resources Inc., a Houston-based consulting firm.
Singh also is optimistic about the deal because Ineos' executive ranks include several former BP executives, and because Ineos tends to operate almost as a holding company, giving its various acquisitions a good deal of independence.
Ineos started in 1998 with various chemical plants once operated by Union Carbide, Imperial Chemical Industries and other firms, then added eight more acquisitions between 2001 and 2005.
In North America, Ineos' plastics-related holdings include a specialty PVC and films plant in Delaware City, Del., and a plant making phenol, a polycarbonate feedstock, in Theodore, Ala.
Innovene's North American business covers major PP works in Alvin and Deer Park, Texas, and Carson, Calif. Its North American HDPE production is in Deer Park and Cedar Bayou, Texas.
Earlier this year, Ineos acquired the North American polystyrene business of BASF AG, including a large polystyrene plant in Joliet, Ill.
