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BASF and Shell set to sell chemicals venture for €6bn

Financial Times: BASF and Shell set to sell chemicals venture for €6bn

By David Firn, Pharmaceuticals and Chemicals Correspondent

Published: August 6 2004 04:00

Posted 7 August 04

BASF and Shell will put their Basell petrochemicals joint venture up for sale later this month, in what is expected to be one of the biggest chemicals auctions to date. Basell, which makes polyolefins – the building blocks for many plastics – is valued at up to €6bn (£4bn).

The potential sale of Basell is one of several transactions planned in the oil industry as BP and Total also take advantage of the upturn in commodity chemicals to sell non-core assets.

Basell returned to profit in the first half of this year on the back of rising industrial demand and buoyant commodity chemicals prices, after a loss in 2003 on turnover of €5.7bn.

“It’s picking up at the moment, but when things were structurally or cyclically weaker it wasn’t doing particularly well,” one industry analyst said yesterday.

CSFB and Lazard are preparing an offer memorandum for the petrochemicals operator that will go out to interested parties later this month. The banks are understood to have received preliminary approaches from both trade and financial buyers.

BASF and Shell say an initial public offering or retaining the business are also options, but insiders point to a sale of the unit by the middle of next year. Private equity groups are seen as the most likely buyers because polyolefin industry buyers could face antitrust issues.

BP is consolidating its olefins and derivatives operations for a possible US IPO in the second half of next year.

Total, the French oil group, is carving out the chlorochemicals, intermediates and performance product assets of Atofina, the petrochemicals business formed by the merger in 2000 of TotalFina and Elf Aquitaine.

BASF and Shell set up the 50:50 Basell joint venture in 2000 to create a global leader in polypropylene and the number one European polyethylene maker from what were considered to be two sub-scale operations.

Polyolefins are the backbone of the plastics industry, being used extensively in vehicle construction, packaging, fabrics and consumer goods. Basell is also a leading supplier of production technology and catalysts.

* Total plans to return the €10bn proceeds from selling its stake in newly merged Sanofi-Aventis pharmaceutical group to shareholders, rather than spending it on acquisitions, Martin Arnold reports from Paris.

Announcing a 22 per cent increase in profits, Robert Castaigne, finance director, said Total would sell its 13 per cent Sanofi stake in the “medium term”, once the company felt the price was attractive.

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