fbpx LYONDELLBASELL AND SASOL FORM INTEGRATED POLYETHYLENE JOINT VENTURE
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LyondellBasell and Sasol form Integrated Polyethylene Joint Venture

Date: 
02 October 2020

Houston and Johannesburg – LyondellBasell (NYSE: LYB) and Sasol (JSE: SOL, NYSE: SSL) today announced they have entered into a definitive agreement to form a 50/50 joint venture (JV) through which LyondellBasell will acquire 50 percent of Sasol’s 1.5 MM ton ethane cracker, 0.9 MM ton low and linear-low density polyethylene plants and associated infrastructure for a total consideration of US$2 Billion. The agreement includes customary rights for each partner regarding the potential future sale of its ownership interest. The JV will operate under the name Louisiana Integrated PolyEthylene JV LLC.

“This investment represents a unique opportunity to bring together the best of both companies and create deep, long-term value while immediately realizing the many benefits of new, strategically-located, world-scale assets,” said Bob Patel, CEO of LyondellBasell. “This approach is consistent with our strategy of investing in high quality assets that meet our threshold for value creation, while also maintaining our investment grade rating and commitment to our dividend. The transaction is expected to be accretive to both cash flow and EPS within one year with significant upside as market conditions continue to improve.”

“We are very pleased to have LyondellBasell join us as a key partner in our U.S. Base Chemicals Business in Lake Charles. LyondellBasell is the ideal partner to ensure the success of these world-class assets with its deep expertise in commodity chemicals,” said Fleetwood Grobler, President and CEO, of Sasol. “This milestone coincides with our 70-year anniversary and represents a significant step in creating Future Sasol, which will be a more sustainable and resilient business for the long-term. We’re excited about this joint venture and look forward to building a mutually beneficial and successful partnership with LyondellBasell.”

Strategic and financial benefits
The JV’s newly constructed assets are strategically located on the U.S. Gulf Coast, with access to low-cost feedstock, storage and logistics infrastructure.

LyondellBasell’s investment in the JV allows the company to expand in a core area of its business and leverages the company’s operational and commercial strengths. Additionally, by investing in these assets, the company will realize immediate returns and eliminate customary construction risks associated with new project execution.

This transaction represents a significant step for Sasol in achieving its financial and strategic objectives by reducing net debt and rapidly shifting the company’s portfolio towards specialty chemicals. Sasol undertook a process to determine the optimal partnership construct for its U.S. Base Chemicals Business. The LyondellBasell proposal offered the best combination of upfront and long-term value, consistent with Sasol’s long-term strategic priorities.

Transaction terms
Under the terms of the transaction agreements, each JV partner will provide pro-rata shares of ethane feedstocks and will offtake pro-rata shares of cracker and polyethylene (PE) products at cost. LyondellBasell will operate the U.S. Base Chemicals assets on behalf of the JV.

Upon close of the transaction, some Sasol U.S. employees will become employees of LyondellBasell.  Sasol will retain full ownership and operational control of its Lake Charles Research and Development complex, Lake Charles East Plant ethane cracker and U.S. Performance Chemicals Business assets in Lake Charles, which produce Ziegler alcohols and alumina, ethoxylates, Guerbet alcohols, paraffins, comonomers, linear alkyl benzene, ethylene oxide and ethylene glycol. The U.S. Performance Chemicals Business is a key part of Future Sasol, consistent with the strategy to increase focus on specialty chemicals where Sasol enjoys differentiated capabilities and strong market positions. Sasol will also retain access to competitively priced onsite ethylene to ensure value chain integration.

The transaction is subject to customary regulatory approvals and approval by Sasol shareholders. The transaction is expected to close by the end of 2020.

Advisors
Kirkland & Ellis LLP is serving as LyondellBasell's legal counsel, while Gordon Dyal & Co. and J.P. Morgan are serving as financial advisors. Latham & Watkins LLP is serving as Sasol’s legal counsel, while Bank of America is serving as financial advisor.

Investor conference call
LyondellBasell will host a conference call on Friday, October 2 at 9:00 a.m. EDT. Participants on the call will include Chief Executive Officer Bob Patel, Chief Financial Officer Michael McMurray and Director of Investor Relations Dave Kinney.

The toll-free dial-in number in the U.S. is +1 (800) 475-8402. A complete listing of toll-free numbers by country is available at www.LyondellBasell.com/teleconference for international callers. The passcode for all numbers is 6934553.

The slides that accompany the call will be available at https://www.LyondellBasell.com/investorevents.

A replay of the call will be available from 11:00 a.m. EDT Friday, October 2 until December 2 at 11:59 p.m. EDT. The replay dial-in numbers are +1 (800) 333-0467 (U.S.) and +1 (203) 369-3627 (toll). The passcode for each is 3652.

Sasol will host a conference call on 2 October 2020 at 14:00 (SA time) via webcast on the following link: https://www.corpcam.com/Sasol02102020. Participants on the call will include President and CEO Fleetwood Grobler and Chief Financial Officer Paul Victor.

The slides that accompany the call will be available at https://www.sasol.com/investor-centre/lake-charles-chemicals-project/lccp-partnering-transaction 

 

Sasol may, in this document, make certain statements that are not historical facts that relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return, executing our growth projects (including LCCP), oil and gas reserves and cost reductions, including in connection with our BPEP, RP and our business performance outlook. Words such as “believe”, “anticipate”, “expect”, “intend", “seek”, “will”, “plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most recent annual report on Form 20-F filed on 28 August 2018 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
 
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