Market Overview

LyondellBasell Gets Half of Sasol US Chemical Project For $2B

LyondellBasell Gets Half of Sasol US Chemical Project For $2B

LyondellBasell Industries NV (NYSE: LYB) is acquiring a 50 percent stake in Sasol Limited’s (NYSE: SSL) Lake Charles Chemical Project in Louisiana.

What Happened: The Dutch multinational will pay $2 billion for the plant and associated infrastructure, the company said in a statement. 

Under the agreement, the two companies will form a 50/50 joint venture which will operate under the name Louisiana Integrated PolyEthylene JV LLC.

“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,” said Bob Patel, CEO of LyondellBasell.

The deal will allow Sasol to reduce debt and shift its portfolio towards specialty chemicals, as per the company statement.

LyondellBasell said that the agreement is expected to close by the end of the year.

Why It Matters: Sasol will retain full ownership and operational control of its plants and allied assets in Lake Charles.

Sasol, the top manufacturer of motor fuel derived from coal, is grappling with high debt and low oil and chemical prices, reported Reuters.

The South African company’s debt stood at $11.35 billion for the year till June 30, made worse by delays and cost overruns at the Lake Charles Plant.

The company told Reuters that the deal would allow net debt before lease liabilities to be reduced from $10 billion to nearly $8 billion.

Sasol is also considering a rights offer of $2 billion before the end of June but said that would be a last resort. The timing and the amount to be raised would depend on the market, the company told Bloomberg.

Price Action: LyondellBasell shares traded almost 0.2% higher at $68.25 in the pre-market session on Friday, while Sasol shares traded 3.25% lower at $7.44.

Photo by Jo Schmaltz via Wikimedia


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