Mergers & Acquisitions

Glencore reportedly bidding for Chevron Corp.’s South African assets after Sinopec deal stalls

Glencore Plc, a global integrated commodity producer and marketer, was reported to be among the companies considering bidding for Chevron Corp.’s South African assets after a proposed sale to China Petroleum & Chemical Corp. (Sinopec) stalled. Chevron’s local partners apparently announced that they will exercise their preemptive right. Chevron Corp. announced last year that it was selling its 75% stake in its South African unit. Chevron solicited expressions of interest for the stake, a sale that would form part of a three-year asset divestment program for the second-largest integrated energy company headquartered in the United States.

Glencore Plc, a global integrated commodity producer and marketer, was reported to be among the companies considering bidding for Chevron Corp.’s South African assets after a proposed sale to China Petroleum & Chemical Corp. (Sinopec) stalled. Chevron’s local partners apparently announced that they will exercise their preemptive right.

Chevron Corp. announced last year that it was selling its 75% stake in its South African unit. Chevron solicited expressions of interest for the stake, a sale that would form part of a three-year asset divestment program for the second-largest integrated energy company headquartered in the United States.

Chevron South Africa operates a 110,000-barrel-per-day (bpd) refinery in Cape Town and a lubricant blending plant in the eastern port city of Durban. Chevron South Africa markets its products through more than 845 Caltex-branded service stations.

In March 2017, Sinopec announced that it has agreed to pay USD900 million for Chevron’s 75% stake. The action by Chevron’s black economic empowerment partners, who own the remaining 25% of the assets, has re-opened the sales process.

Glencore appears to be in an acquiring spree. Yesterday, the company announced its intention to make an offer via a public tender for up to 48.19% of class A common shares of Volcan, which produces some of the highest quality zinc concentrates in Peru. The transaction will provide an increase and extension of Glencore’s zinc production profile and the opportunity for synergies with Glencore’s existing Peruvian zinc operations. The aggregate consideration payable by Glencore pursuant to the terms of the offer will be between USD531 million and USD956 million, depending on the level of acceptances.

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