CP Chemical in a US$15 bn bid to acquire Nova Chemicals

Chevron Phillips (CP) Chemical Company, the US petrochemical company jointly owned by Chevron Corporation and Phillips 66, has made a bid to acquire Canada’s Nova Chemicals for more than US$15 billion including debt, according to a Reuters report.

The report says that Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, the owner of Nova, had been exploring a sale of the Canadian plastics maker since the beginning of the year. Then, it had been reported that Mubadala had been contemplating options like a sale of a stake in the plastics manufacturer or to keep its holding stake in Nova.

Headquartered in Calgary, Alberta, Nova Chemicals is a petrochemical company founded in 1954 with current businesses and joint ventures focusing on ethylene and polyethylene, chemical and energy co-products, expandable polystyrene, and performance styrenic polymers.

During the first quarter of 2019, Nova generated profit of US$59 million compared to a loss of US$555 million for the first quarter of 2018. The quarter-over-quarter increase in profit was due to the legal provision of $727 million (net of tax) that recorded in the first quarter of 2018, offset by lower selling prices for polyethylene and ethylene in the first quarter of 2019, said Nova.

Abu Dhabi acquired debt-laden Nova for US$500 million in 2009 using its stated-owned International Petroleum Investment Co (IPIC). Since then, the company’s business has grown rapidly, taking advantage of the shale-driven natural resources boom in North America.

Two years ago, Abu Dhabi merged IPIC with Mubadala, which manages over US$225 billion in assets.

Mubadala, through its holding company, also owns 64% of Austrian chemical firm Borealis, with the remaining 36% belonging to OMV, an international, integrated oil and gas company based in Vienna. Abu Dhabi National Oil Co. (ADNOC), UAE’s state-owned oil company, and Borealis own polyolefin maker Borouge.

Meanwhile, CP Chemical has 31 production facilities located in the US, Singapore, Saudi Arabia, Qatar and Belgium. Last year, the Texas-headquartered firm had a revenue of US$12 billion.