Cepsa has decided to retain its petrochemical subsidiary. The company, which entrusted Citi with the sale of this subsidiary last year, has decided to cancel the process when it had two offers from the private equity giants Platinum and KPS on the table, according to market sources. The idea now is to maintain the independence of this business, but with a focus on promoting its green transition.
The oil company began a strategic review of its chemical business under the leadership of its former CEO, Philippe Boisseau. Since then, the company has had a new CEO, Maarten Wetselaar, focused on the implementation of a new strategic plan to be fulfilled before 2030. In this context, Cepsa has decided that the best way to strengthen its potential and grow internationally is to maintain this business within the group.
“Cepsa has completed the review of the strategic options for its Chemicals business. After announcing in November 2021 that this division would have greater operational autonomy, Cepsa Química is experiencing very good operating and financial results. The shareholders have therefore concluded that the best future alternative for the business is for it to remain within the Cepsa group. Under Cepsa’s new ‘Positive Motion’ strategy, Cepsa Química will implement its energy transition program with the full support of the entire organization,” sources from the company.
Like its competitors, Cepsa’s sights are now on taking a green turn that leaves behind its exclusive dependence on fossil fuels. Under this strategy, it also plans to accelerate the green transition of the chemical business itself, for which new sustainable products based on renewable and recycled raw materials will be launched on the market.
The company also plans to maintain the independence of Química, which employs around 800 people and has plants in seven countries (Spain, Germany, Brazil, Canada, China, Indonesia and Nigeria). It is the world leader in the production of LAB (base for biodegradable detergents) and cumene (intermediate product used in the production of phenol and acetone). It is also the second largest manufacturer of phenol and acetone, the main raw materials used to produce engineering plastics.
In making this decision, Cepsa relies on the smooth running of the subsidiary. In 2021, the EBITDA of this subsidiary soared by nearly 30%, to 461 million. And in the first quarter of this year the adjusted gross operating profit reached 110 million.
The war in Ukraine
The process of selling Cepsa Química has been crossed by the war in Ukraine, which has triggered the price of oil. The company initially received a list of fund offers from Private capital international companies —including Platinum, KPS, Lone Star, Apollo and an agreement between CVC and Diamond Capital—, as well as the Indian company Indorama. They expected to obtain 3,000 million euros.
The war in Eastern Europe made the Spanish company and Citi recalculate the process. And review the business and allow interested investors to rebid their bids. In the end, only Platinum and KPS remained in the auction, although, according to market sources, with bids below Cepsa’s price expectations.