Ineos Buys Innovene

Privately held Ineos, of the U.K., has agreed to buy BP’s chemical operations for $9 billion.

BP split out its olefins and derivatives from its other petrochemical operations in April 2004, added two refineries to the package in November 2004, and early this year officially formed the operations into the independent company Innovene. The oil giant earlier had contemplated launching Innovene on the stock market through an initial public offering, although according to its chief executive, John Lord Browne, the company had received a number of acquisition offers.

Innovene had sales in 2004 of roughly $18 billion in olefins, derivatives, and refining operations. The $9 billion cash sale, which is subject to regulatory approvals, includes all Innovene’s manufacturing sites in the U.S. and Canada and in the U.K., France, Belgium, Germany, and Italy. The deal also includes Innovene’s stake in its joint venture with Nova and its markets and technologies. The sale is expected to be concluded early in 2006.

The deal vaults Ineos into the top tier of global chemical companies. According to the company’s chief executive, Jim Ratcliffe, Ineos has sales running at the rate of $8 billion per year. That figure, combined with the Innovene sales, would have placed the company as the sixth largest chemical company worldwide, between ExxonMobil at number five and Total at number seven.

“This is a transformational acquisition elevating Ineos,” says Ratcliffe, whose company has thrived in buying and investing in unfashionable commodity chemical businesses.