BP sells Innovene unit to Ineos, calls off IPO

10-Oct-05

The world's second largest publicly traded oil company BP Plc, has called off a planned initial public offering (IPO). BP will sell its Innovene chemicals unit to Ineos Group Holdings Plc for US$9 billion, the proceeds of which will be returned to BP shareholders as part of the company's share buy-back program. This deal will create the world's fourth biggest independent petrochemicals group. BP had announced plans to sell the petrochemicals unit last April. The business was then valued at US$7 billion and later supplemented with more oil-refining assets, and was losing money. BP filed for a public offering of the business last month Ineos, based in Lyndhurst, England, started in 1998, has manufacturing operations at 46 facilities in 14 countries. Ineos makes products including food packaging, refrigerants and sulfur-based chemicals. Ineos has sales of 5 billion euros (US$6 billion). Ineos sold a chemical facility in Belgium to BP Chemicals in 1978. Ineos will pay for its purchase using loans and bonds, with Barclays Plc, Merrill Lynch & Co. and Morgan Stanley underwriting the deal. Innovene will adopt the Ineos name at some point, and will be run from the U.K. Only Dow Chemicals, Dupont and BASF are bigger independent petrochemical companies.