Undaunted by the new push for a war on plastics in the face of environmental opposition, joint venture Chevron Phillips Chemical Company LP has made a bid for Nova Chemicals Corp for $15 billion, exclusive Reuters sources claimed on Thursday.
Nova Chemicals Corporation, owned by UAE’s state-owned Abu Dhabi’s Mubadala Investment Co and located in Canada, is a plastics manufacturer, has annual sales of $3.8 billion as of 2017, according to its website, manufacturing ethylene, polyethylene, expandable polystyrene, and chemical co-products. Its expandable polystyrene segment (EPS) is used in plastic cups and containers—a particular sore spot for environmental activists that have singled out disposable foodservice items.
Mubadala Investment Co, according to Reuters sources, has been on the lookout for a buyer since the beginning of the year. Mubadala may get other offers for the plastics manufacturer as well.
Chevron Phillips Chemical Company—a joint venture between Chevron and Phillips 66 headquartered in Texas—has production facilities in the United States, Singapore, Saudi Arabia, Qatar, and Belgium. If successful, Nova would be Chevron Phillips’ first move into Canada.
Sources in March had rumored that Mubadala Investment Co. was looking to dump Nova, and thought it was worth $10 billion or more, according to Arabian Business. It is thought that state-owned Mubadala is looking for cash to help the UAE diversify away from oil. While Nova, which Mubadala acquired in 2009, was profitable at the time, it was largely on the back of the success of North American shale.
Despite the calls for a worldwide ban on plastics in general, plastics demand is expected to be robust, and Big Oil is undeterred and making its move into petrochemicals. Another large merger between Exxon and Sabic suggest that the trend is for a consolidation of smaller petrochemical companies into giant ones, as Big Oil fears environmental opposition to ICE engines more than it fears environmental opposition to plastics.
By Julianne Geiger for Oilprice.com