THE WHAT? South African chemicals firm Sasol has formed a 50/50 joint venture with LyondellBasell through which LyondellBasell will acquire 50 percent of Sasol’s US Base Chemicals Business for US$2 billion.
THE DETAILS The JV will operate under the name Louisiana Integrated PolyEthylene JV and the deal includes customary rights for each partner regarding the potential future sale of its ownership interest.
“This investment represents a unique opportunity to bring together the best of both companies and create deep, long-term value while immediately realizing the many benefits of new, strategically-located, world-scale assets,” said Bob Patel, CEO of LyondellBasell. “This approach is consistent with our strategy of investing in high quality assets that meet our threshold for value creation, while also maintaining our investment grade rating and commitment to our dividend. The transaction is expected to be accretive to both cash flow and EPS within one year with significant upside as market conditions continue to improve.”
“We are very pleased to have LyondellBasell join us as a key partner in our US Base Chemicals Business in Lake Charles. LyondellBasell is the ideal partner to ensure the success of these world-class assets with its deep expertise in commodity chemicals,” said Fleetwood Grobler, President and CEO, of Sasol. “This milestone coincides with our 70-year anniversary and represents a significant step in creating Future Sasol, which will be a more sustainable and resilient business for the long-term. We’re excited about this joint venture and look forward to building a mutually beneficial and successful partnership with LyondellBasell.”
THE WHY? LyondellBasell will gain scale, with the deal allowing it to expand in a core area of its business and realizing immediate returns without taking on construction risks associated with new projects, while Sasol will reduce its net debt and shift its portfolio towards specialty chemicals.