Oil giant BP today agreed the $9bn (€7.4bn) sale of its petrochemicals business after scrapping plans for a stock market flotation.
BP said a sale of its Innovene unit to UK chemicals group Ineos was the best outcome for investors because it removed uncertainty about market conditions at the time of a listing.
Unions welcomed the deal which affects the 1,300 permanent staff and 700 contractors at the Grangemouth refinery and chemicals plant, near Falkirk, which BP has owned since 1924.
BP announced last year that it wanted to hive off the Innovene unit, which makes products used in plastic goods such as drink containers and automotive parts.
Investors were told that a flotation in the second half of this year was the most likely option, but BP then received a number of approaches from within the chemicals industry about a trade sale.
Chicago-based Innovene employs 8,000 staff at plants in seven countries in North America and Europe.
Lord Browne, chief executive of BP, said: “Innovene has proved to be a very attractive business to its peers in the chemicals sector. This deal is the very best of a number of good offers.”
The net proceeds of the sale will be returned to investors who have also benefited from BP buying back shares using surplus cash generated by record oil prices.
Lord Browne said a trade sale was also the right decision because investors who would have bought Innovene shares after a flotation may have been worried about BP’s future intentions.
Ineos was formed in 1998 and has grown rapidly through a string of acquisitions from ICI, Dow, Degussa, BP, Enichem, Unilever and Solvay.
It produces speciality petrochemicals such as acetone and car air-conditioning fluids.
Jim Ratcliffe, chief executive of Ineos, said: “This is a transformational acquisition elevating Ineos to the world’s fourth largest independent petrochemicals company.
“Ineos and Innovene share a BP heritage of high quality people, assets and technology and are highly complementary businesses.”
Employing around 7,000 staff around the world, Ineos has sites in the UK at Runcorn and Winnington in Cheshire, Warrington, south Glamorgan and Thornton Cleveleys in Lancashire.
Jim Mowatt, of the Transport & General Workers Union (T&G), expressed surprise at the announcement of the sale of Innovene.
But he added: “The bidder, Ineos, is a company which has looked after its workers well and has good relations with trade unions.
“As chief negotiator within BP my job is to minimise the uncertainty that thousands of my members feel.
“We have embraced change successfully before and we will want to ensure that we have a stable platform for the future so that BP’s chemicals business remain world class.”