BP and French company Solvay SA have signed a preliminary deal to form two polymer joint ventures and swap other polymer-related assets.
The deal involves businesses with combined turnover of $2.62 billion. Financial terms were not disclosed.
In Europe, the companies plan to combine their high-density polyethylene (HDPE) businesses into a 50:50 joint venture. Solvay will also transfer its polypropylene business to BP.
In the US, Solvay and BP will create a 51:49 joint venture for Solvay's HDPE business, and Solvay will also transfer its US polypropylene business to BP. BP will transfer its engineering polymers business to Solvay.
The proposed transaction is subject to final agreement between the companies, agreement with workers' representatives, and regulatory approval. BP and Solvay expect completion of the proposed deal in mid-2001.
BP said the addition of Solvay's 800,000 tonnes/year polypropylene position in the US and Europe will give it the world's second largest portfolio of polypropylene assets�3.1 million tonnes/year.
The two HDPE joint ventures will give BP and Solvay 2.2 million tonnes/year of production.
�This agreement is an important step in our petrochemicals portfolio repositioning,� said Byron Grote, chief executive of BP�s chemicals business. �It creates an industry-leading joint venture in HDPE in Europe, allows [BP] to enter the US HDPE business as an integrated producer of ethylene, gives BP an equity position in the US HDPE market to support the growth of our olefins business, and accesses significant efficiencies from merging Solvay's polypropylene assets into our own. Our disposal of the engineering polymers business is consistent with our focusing the BP portfolio into a limited set of distinctive global positions.�