Report: Chevron Phillips considers buying Nova Chemicals for $15B – Chron
Mark Lashier president and chief executive officer of Chevron Phillips Chemical Company engages in an interview at the boardroom of the Chevron Phillips offices in The Woodlands, Wednesday, Jan. 2, 2019. Chevron Phillips Chemical is reportedly offering to buy Calgary-based petrochemical maker Nova Chemicals.
Chevron Phillips Chemical Corp.  is reportedly considering offering Nova Chemicals for $15 billion including debt.
The Woodlands-based joint venture of Phillips 66 and Chevron Corp. already is a huge global petrochemical that could further expand its footprint with Calgary-based Nova Chemicals.
Unnamed sources told Reuters Thursday that Chevron Phillips has made the offer, but that another buyer may emerge. Nova Chemical's owner, Abu Dhabi's sovereign wealth fund Mubadala Investment Co.,could also decide to keep a stake in Nova Chemicals in a deal, one of the sources added.
Chevron Phillips Chemical Co. and Nova Chemicals both declined to confirm the reports.
The company said in a statement to the Chronicle that it is "continuously exploring accretive growth and investment opportunities around the world. We recently completed our U.S. Gulf Coast Petrochemical Project and have publicly stated that we are exploring additional projects that would enhance enterprise value. Due to these ongoing exploration activities, it is inevitable that rumors and speculation will surface from time to time. However, it would be inappropriate to comment on such speculation."
RELATED: Chevron Phillips narrowing in on spot for next $5.8B petrochemical expansion
If a potential deal does come to fruition, it could make Chevron Phillips the third largest polyethylene producer in North America, just after Exxon Mobil Chemical Company and Dow Chemical Company, said  Ashish Chitalia, chemicals principal analyst at the research firm Wood Mackenzie. The acquisition will also mean that Chevron Phillips will become the largest producer of high density polyethylene in North America, followed by LyondellBasell, Chitalia added.
Nova reported $4.46 billion in annual sales last year, up from $3.38  billion the year earlier, according to the company's website. It posted a loss of $171 million last year compared to a profit of $129 million the year before.
The company reported $3.3 billion in debt in the first quarter this year. Last year Dow won a $1 billion lawsuit against Nova over a dispute regarding the ethylene cracker in Alberta, but it's not clear how that would factor into the sale, analysts at energy investment and merchant bank Tudor Pickering and Holt Co. said in a note to clients.
EARLIER: Total, Novealis expand Baystar's Pasadena petrochemical complex 
Although details have yet to emerge, Tudor Pickering analysts speculated that the market would not react well to the potential deal partly because they said it isn't a good bargain value. The deal would also likely require a significant contribution from Phillips 66, potentially up to $6 billion, the Tudor analysts said.
Phillips 66 already has a big spending plant this year and recently raised capital expenditures by roughly 10 percent due to cost overruns on Gray Oak coupled with early spending on the newly-sanctioned Red Oak and Liberty pipes, the Tudor Pickering analysts said. Additionally the  polyethylene is expected to somewhat over-supplied over the next three years, and the petrochemical industry is battling with the impacts of the U.S.-China trade war that could depress prices and stymie growth in the U.S.
P66 GROWTH: Phillips 66, Bridger partner on Bakken pipeline - Houston Chronicle
Nova Chemicals has 2,900 globally and makes polyethylene and ethylene, some of the most common plastics. It also makes produces expandable polystyrene resins used in construction, protective and temperature controlled packaging, cups and containers, material handling, safety and more.
Earlier this year Nova's joint venture subsidiary with Vienna-based Borealis AG, called Novealis, broke ground on a 625,000 metric ton unit in Pasadena, Texas, in partnership with the French oil major Total SA. The unit is owned through a Total-Novealis joint venture called Bayport Polymers LCC and is expected to start up in 2021.
Other major capital projects include a cracker and polyethylene expansion in Sarnia, Ontario scheduled to start up in the fourth quarter of 2021 an a recent feedstock flexibility project at Sarnia to run more Marcellus ethane.
Nova Chemicals was also one of the founding members, along with Chevron Phillips Chemical, of the industry group Alliance to End Plastic Waste that launched earlier this year and aims to reduce plastic waste in the environment.
Marissa Luck covers the energy industry for Houston Chronicle. Previously she worked at Austin Business Journal covering real estate in Austin, TX and The Daily News in Longview, Wash. where covered heavy industry, energy, labor, public ports, utilities and business on the Columbia River near Portland, Ore. Originally from Hawaii, she grew up near Seattle and studied international political economy at The Evergreen State College in Olympia, Wash.


Leave a Reply

Your email address will not be published. Required fields are marked *