Good chemistry

7 October 2005

Not a bad change of heart the oil major had planned to partially float the unit, and at a lower estimated price. Better still, BP says it will return the proceeds to investors. Add in dividends and buybacks, and BP s cash yield rises to 11%.

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BP sold its Innovene petrochemicals unit to Ineos Group Holdings for $9bn, abandoning a planned initial public offering.

BP, which will return the net proceeds to shareholders, decided to sell the unit after recent IPOs have proved a mixed success. Early estimates had valued the unit at $7bn.

Ineos will borrow almost E10bn ($12bn) to fund the deal, which will be underwritten by Barclays, Merrill Lynch and Morgan Stanley. The extra $3bn will be used to refinance existing debt.

The transaction comes a few months after Ineos lost out in the bidding for Basell, a plastics joint venture between Shell and BASF.

UKbased Ineos, which was founded in 1998 following a management buyout of a former BP petrochemical unit, has annual sales of E5bn.

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