(Reuters) -LyondellBasell said on Friday it has entered into an agreement to sell its production facility and associated business at Bayport, Texas to chemical maker INEOS Oxide for $700 million.
The transaction is expected to close in the second quarter of 2024, following the completion of planned maintenance at the facility and regulatory approval, the company said in a filing.
LyondellBasell had said in March that it was exploring strategic options to sell its U.S. Gulf Coast-based ethylene oxide and derivatives business, saying it was not a business “where the company seeks a leading long-term position”.
Tobias Hannemann, CEO of INEOS Oxide, said the purchase complements the company’s existing ethanolamines production facility in Plaquemine, Louisiana.
Ethylene oxide is used in the production of pharmaceuticals, cosmetics, semiconductors, polyester, food packaging and construction materials, among others.
Analysts at TPH Energy Research said the plant gives access to cheap U.S. ethane and natural gas, sitting on a “favorable spot on the global cost curve”.
The deal would free up more capital for LyondellBasell after the company acquired stakes in several recycling firms this year, according to the analysts.
TPH Energy also said the deal comes at a favorable 8.2x multiple against the $85 million of run-rate profit disclosed by the company during its 2023 Capital Markets Day.
Up to last session’s close, shares of LyondellBasell have risen 11% so far this year.
Separately, the company had said in May that it plans to delay closing of its Houston, Texas oil refining business to no later than the end of the first quarter in 2025, due to the cost of needed overhauls after two failed attempts to sell the plant.
(Reporting by Seher Dareen in Bengaluru; Editing by Shilpi Majumdar)