In a case of the little fish swallowing the big fish, Ineos has agreed to buy BPs Innovene – an olefins and derivatives business that is more than triple its size – for $9 billion. The transaction, expected to be completed around the beginning of 2006, would broaden Ineos activity with chemicals used in the lubricants industry.
Ineos, which is based in Southampton, U.K., is currently made up of nine businesses that supply diverse specialty and intermediate chemicals, from chlorine to phenols to silicas and vinyl. Ineos Chlor, one of thenine,supplies among other products chlorinated paraffins used in cutting fluids to provide extreme pressure protection. Ineos recorded sales of $8 billion in 2004.
Innovene is already the worlds fifth-largest petrochemical and polymer company, with turnover of $25 billion. Primarily a producer of olefins and polyolefins, the company is one of the worlds two largest manufacturers of linear alphaolefins (the other being Chevron Phillips Chemical Co.), some of which are used to make polyalphaolefins employed as premium base stock by the lubricants industry.
Ineos is just 10 years old and has been built mostly through a series of acquisitions, but none compare to the Innovene deal.
This is a transformational acquisition elevating Ineos to the worlds fourth-largest independent petrochemicals company, Chief Executive Jim Ratcliffe said.
Innovene, which is based in Chicago, has been on the sales block for 18 months, although BP did not carve it out until April of this year. The British petroleum giant has described Innovene as a non-core asset, but said last week that it was approached by a number of potential buyers. BP had also considered divesting the unit through an initial public stock offering.
The transaction includes two petrochemical refineries – one at Grangemouth, U.K., the other in Lavera in France.